Holding

There was a proper arbitration agreement and the civil court had jurisdiction to entertain the award; the High Court’s dismissal was correct.

Summary

The father and son, both Vaidyas, referred their long‑standing property disputes to an arbitrator, who issued an award on 18 January 1977 which was signed by both parties and contained an endorsement that the award was agreed to and binding. The son later filed an application under section 17 of the Arbitration Act, 1940 to have the award filed and enforced; the trial court took cognizance and passed a decree in terms of the award. The father challenged the award on the ground that there was no separate written arbitration agreement and that the civil courts lacked jurisdiction, but his appeals and revisions were withdrawn after the parties executed a letter on 14 August 1978 reaffirming the award. The High Court dismissed the father's revision, holding that a valid arbitration agreement existed and that the civil court had jurisdiction under sections 14 and 17 of the Arbitration Act and section 9 of the CPC, and that the challenge was barred by res judicata. The Supreme Court affirmed the High Court’s view, stating that the endorsement on the award and the later letter satisfied the requirements of section 2(a) of the Arbitration Act, and that the civil court was competent to entertain the award. Consequently, the Special Leave Petition was dismissed.

Issues considered

Whether a valid arbitration agreement existed despite the absence of a separate written agreement signed by both parties.
Whether the civil court had jurisdiction to take cognizance of the award under sections 14 and 17 of the Arbitration Act, 1940 and section 9 of the CPC.
Whether the petitioner's challenge to the award was barred by the doctrine of res judicata.

Legislation cited

Arbitration Act, 1940s. 14, s. 17, s. 2, s. 30, s. 33
Code of Civil Procedure, 1908s. 9

Subjects

Arbitration agreementCivil Procedure CodeJurisdictionRes judicataAward enforcementSpecial Leave PetitionArbitration Act 1940

Judgment

.
VAIDYA HARISHANKAR LAXMIRAM RAJY AGURU
A
OF RAJKOT
v.
PRATAPRAY HARISHANKAR RAJYAGURU OF RAJKOT

APRIL 13, 1988
B
ISABYASACHI MUKHARJI AND S. RANGANATHAN, JJ.]

Arbitration Act, 1940: Sections 2, 14, 17, 30 and 33-Award-
Main objection-No written agreement signed by both parties to refer
the matter to arbitration-Conduct of parties-Whether can be cons-
C trued as proper arbitration agreement-Whether civil court has jurisdic- ~
tion to take cognizance of award. r
Civil Procedure Code, 1908: Section 9---Award under Arbitra-
tion Act-Cognizance of-Civil Court-Whether has jurisdiction.

D The Petitioner and the respondent-father and son respectively
referred certain disputes, which arose between them to the Arbitrator,
who made the award. The award, duly signed by the parties and the
Arbitrator, contained an endorsement to the effect that the award was
agreed to and binding upon both the parties.

E The respondent filed an application, which was later converted
into special civil suit, for filing of the award, and sought a judgment in
terms of the award under s. 17 of the Arbitration Act, 1940. Conse-
quent npon the filing of the award, notice was issued to the petitioner,
who filed objections. The trial court rejected the objections and passed
decree in terms of the award.
F
The petitioner preferred a first appeal against the aforesaid
decree and also filed a revision application, but later withdrew them in
pursuance of an agreement reached between the parties on August 14,
1978, reaffirming the appointment of the arbitrator and the award
made by him and the trial court judgment became final.
G
Thereafter, the petitioner filed a snit for setting aside the decree
passed by the trial court which was dismissed. The revision/appeal
against the aforesaid decision was withdrawn.

During the execution proceedings, the petitioner filed a civil revi-
H sion application, which was summarily rejected. The High Court held
534
V.H.L. RAJYAGURU v. P.H. RAJYAGURU 535

that the petitioner was not entitled to challenge the award and the A
revision before it suffered from res judicata. Hence the Special Leave
Petition to this Court.

The main objection to the award was that there was no written
agreement signed by both the parties to refer the disputes to arbitra-
l tion. It was aiso contended that the previous proceedings were without B
jnrisdiction.

- Dismissing the Special Leave Petition,

HELD: 1.1 It is clear from the conduct of the parties that there
was a proper arbitration agreement in terms of s. 2(a) of the Arbitra-
tion Act, 1940. By signing the award it could be said that the parties had
c
agreed to refer the disputes in writing to the arbitration of the named
arbitrator. This agreement was done twice, firstly by signing an
endorsement below the award and secondly, by entering into an agree-
ment in the form ofa Jetter dated 14th August, 1978. [538E]
D
1.2 Section 9 of the Civil Procedure Code 1908 provides that the
Courts shall, subject to the provisions contained in the Code, have
jurisdiction to try all suits of a civil nature excepting suits of which their
cognizance is either expressly or impliedly barred. [539B I

In the instant case there was DO such express or implied provision E
nor any inability of the Judge concerned. The Civil Court, therefore,

-
•
had jurisdiction to take cognizance of the award under sections 14 and
17 of the Arbitration Act. [538G I

The High Court was, therefore, right in dismissing the application
of the petitioner. [539E I F

Rajah Amir Hassan Khan v. Sheo Baksh Singh, 11 I.A. 237; Seth
Hira Lal Patni v. Shri Kali Nath, [1962] 2 SCR 747; Vasudev Dhan-
jibhai Modi v. Rajabhai Abdul Rehman and others, I1971] 1 SCR 66;
M/s. Guru Nanak Foundation v. M/s. Rattan Singh and Sons, [1982] l
SCR 842; Prasun Roy v. The Calcutta Metropolitan Development G
Authority and another, A.I.R. 1988 S.C. 205 and Chowdhri Murtaza
Hossein v. Mst. Bibi Bechunnissa, [1876] 3 Indian Appeal 209 at 220,
referred to.

CIVIL APPELLATE JURISDICTION: Special Leave Petition
(Civil) No. 4783 of 1988. H
536 SUPREME COURT REPORTS [1988) 3 S.C.R.
'(
From the Judgment and Order dated 23.2.88 of the High Court
A
of Gujarat in Civil Rev. Appln. No. 1737 of 1982.

S.K. Dholakia, D.L. Kothari, R.C. Bhatia and P.C. Kapur for
the Petitioners.
,.__
B The.Judgment of the Court was delivered by

SABYASACHI MUKHARJI, J. This is an application for leave
to appeal under Article 136 of the Constitution of India from the
judgment and order of the High Court of Gujarat dated 23rd
February, 1988. By the impugned judgment, the High Court has dis-
c missed the civil revision application which challenged the award made
in this case. t
The petitioner is the father of the respondent. Both of them are
established Vaidyas in Rajkot. They come from a well-to-do family.
The petitioner is advanced in age and both the father and the son have
D been fighting between themselves since more than a decade. The High
Court found that the petitioner and the respondent had referred their
disputes to one Kantibhai Vaidya (Shri Kantilal Dayaram Jani) who
had intervened between them with the good intention to bring their .,
disputes to an end. He made an award. The award was produced. It )...
appears that the award was endorsed and signed by both the parties. In
E the award, it was stated by the arbitrator that he had called both the
father and the son at his residence on 18th January, 1977. He had
discussed the matter with both of them and had warned them that both
of them would ruin themselves in the property disputes, if they did not
solve the matter amicably. In the award, it was stated that the entire
responsibility of solving the_ dispute was entrusted to him and the j{
F petitioner and the respondent had agreed to such entrustment. \
Accordingly, he made the award on 18th January, 1977. Below the
award, both the parties and the arbitrator had signed. The endorse-
ment reads, when translated in English, as found by the High Court
that the award is agreed to and binding upon both the parties and that
the entire responsibility of the arbitrator will lie on Shri Kantibhai
G Vaidya and that he has taken the responsibility. Thereafter followed a
spell of litigation. The respondent applied on 20th June, 1977 for filing ).'._ _
the award and sought the judgment in terms of the award under sec- .
tion 17 of the Arbitration Act, 1940 {hereinafter called 'the Act'). A J
notice consequent upon the filing of the award was issued to the
petitioner. The application was converted into Special Civil Suit No. 84
H of 1977. It was stated in the application to file the award, that the
V.H.L. RAJYAGURU v. P.H. RAJYAGURU [MUKHARJI, J.[ 537

petitioner had torn off the award and, therefore, the respondent was
A
compelled to rely upon a photo-copy of the original award, which was
produced with the application. The petitioner filed his objections to
the application but did not file any application within the prescribed
limitation of 30 days. The learned trial Judge rejected the objections
filed beyond the period of limitation and for the reasons that (1) the
notice was already given to the party concerned about the filing of the B
award, (2) the time for making an application to set aside the award
had expired and no such application was made (3) the award was not

- set aside under section 30 and (4) that the award was not remitted
under section 16(5) of the Act. The learned trial Judge made a decree
in terms of the award.

The petitioner preferred a Civil First Appeal against the judg-
c
ment and decree passed in Special Civil Suit No. 84 of 1977 and had
also preferred Civil Revision Application No. 655 of 1978. Both these
legal proceedings were, however, withdrawn by the petitioner _and
thus the judgment of the trial court in Special Civil Suit No. 84 of 1977
became final. The High Court had recorded that the First Appeal and D
Civil Revision Application were withdrawn in pursuance of an agree-
ment reached between the parties on or about 14th August, 1978. A
copy of the said agreement was also produced before the Court as
Exhibit 40. It was signed by both the parties as well as their respective
advocates. The agreement was in the form of a letter addressed to the
arbitrator wherein it was stated that both of them had appointed him E
as an arbitrator to resolve the disputes between them and that he had
given an award dated 20th January, 1977 in respect of which award,
there had been continued objections but now they have agreed that
both of them should abide by the award dated 20th January, 1977 and
....__\-that its interpretation should be left to the arbitrator himself. It was
also categorically mentioned therein that its interpretation by the F
, - arbitrator would be binding on both the parties. It was clear, there-
fore, that both of them had re-affirmed the acceptance of the award.

This letter of· 14th August, 1978 was replied in the form of a
letter dated 4th September, 1978 addressed to the petitioner by the
arbitrator, that is Exhibit 137. The petitioner thereafter filed a civil G
suit for setting aside the decree passed in Special Civil Suit No. 84 of
1977 and had also submitted an application to obtain interim orders.
That application was decided against him, against which he preferred
an appeal/revision.but later on, he withdrawn the said appeal/revision.

During the course of the execution proceedings, the petitioner H
538 SUPREME COURT REPORTS [1988] 3 S.C.R.

preferred a civil revision application against the judgment and order
A
passed by the Civil Judge raising practically all the disputes which had
been raised by the petitioner in this civil revision application. The
same was rejected summarily.

The main objection to the award is that there was no written
B agreement signed by both the parties to refer the disputes to arbitra-
tion, It is clear from the narration of facts that the parties had agreed
to refer the dispute to the arbitrator. The award was signed by both the
parties, about which there is no factual dispute, reiterated the fact that
the parties had agreed to refer the dispute to the arbitration of the said
arbitrator and that he made an award. All these are in writing and
c signed by all the parties. This, in our opinion, in the light of the facts
and circumstances of the case can certainly be construed to be a proper
arbitration agreement in terms of section 2(a) of the Act. In this con-
t
nection reference may be made to the observations of this Court in
Prasun Roy v. The Calcutta Metropolitan Development Authority and
another, A.I.R. 1988 S.C. 205 where all the relevant authorities on this
D point have been discussed. See also in this connection the decision of
the Judicial Committee in Chowdhri Murtaza Hossein v. Mst. Bibi
Bechunnissa, [ 18761 3 Indian Appeal 209 at 220. The observations in
the said decision were made in different context. But in the present
context, it is clear that the conduct of the parties that there was an
arbitration agreement and by signing the award it could be said that
E the parties had agreed to refer the disputes in writing to the arbitration
of the named arbitrator. This agreement was done twice, firstly by
signing an endorsement below the award and secondly, by entering
into an agreement in the form of a letter dated 14th August, 1978 .,
(Exhibit 40).

F In that view of the matter, we are in agreement with the High __J' _,..
Court that on this aspect the petitioner is not entitled to challenge the ·
award. The High Court has further held that the revision before the
High Court suffered from res judicata. The High Court, in our opinion,
was right in doing so. It was contended that the previous proceedings
were without jurisdiction. We are unable to accept this contention.
G The Civil Court had jurisdiction to take cognizance of the award under
sections 14 and 17 of the Act. This question had come up for consid- )t
eration before the Judicial Committee in Rajah Amir Hassan Khan v. . ·--,
Shea Baksh Singh, 111.A. 237. The Judicial Committee held that they
had perfect jurisdiction to decide the question which was before them
(namely, whether the suit was barred as res judicata) and they did
H decide it. It was not relevant according to the Judicial Committee,
V.H.L. RAJYAGURU v. P.H. RAJYAGURU [MUKHARJI, J.J 539

whether they decided it rightly or wrongly, they had jurisdiction to A
decide the case; and even if they decided wrongly, they did not exer-
cise their jurisdiction illegally or with material irregularity.
Section 9 of the Civil Procedure Code provides that the Courts
shall (subject to the provisions herein contained) have jurisdiction to
try all suits of a civil nature excepting suits of which their cognizance is
B
either expressly or impliedly barred, In this case, there was no such
express or implied prohibition nor any inability of the Judge con-
cerned. In this connection, it may be useful to refer to the observations
of this Court in Seth Hira la/ Patni v. Shri Kali Nath, [1962] 2 SCR 747,
where this Courlobserved that the validity of a decree could be chal-
lenged in execution proceedings only on the ground that the Court
which passed the decree was lacking in inherent jurisdiction in the c
sense that it could not have seizing of the case because the subject
matter was wholly foreign to its jurisdiction or that the defendant was
dead at the time the suit had been instituted or decree was passed or
some such other ground which could have the effect of rendering the
court entirely lacking in jurisdiction in respect of the subject-matter of
the suit or over the parties to it. In this connection reference may be D
made to the observations of this Court in Vasudev Dhanjibhai Modi v.
Rajabhai Abdul Rehman and others, [1971] 1 SCR 66.
· Having regard to all these factors, we are of the view that the
High Court was right in dismissing the application in the manner it did.
E
In Mis. Guru Nanak Fundation v. M/s. Rattan Singh and Sons,
[1982] 1 SCR 842, where this Court observed that interminable, time
consuming, complex and expensive court procedures impelled jurists
to search for an alternative forum, less formal, more effective and

,
speedy for resolution of disputes avoiding procedural claptrap and this
led them to the Arbitration Act. However, the way in which the pro-
ceedings under the Act are conducted and without an exception F
challenged in Courts, has made lawyers laugh and legal philosophers
weep. This Court further observed that experience shows and law
reports hear ample testimony that the proceedings under the Act have
become highly technical accompanied by unending prolixity, at every
stage providing a legal trap to the unwary. With respect, we could not
G
agree more in the facts and the circumstances of this case.
In the view,· however, we have taken of the matter indicated
above, we decline to interfere with the order of the High Court. The
special leave petiticinfails and is accordingly dismissed.

N.P.V. Petition dismissed. H