Mr. H.S. Vedi vs Mr. K.S. Kler And Others
1995 Latest Caselaw 498 Del

ORDER

1. Heard the learned advocates for both the sides.

2. This is an application filed by the original plaintiff in OMP No. 147-A/1987 under Order 6, Rule 17 of the Code of Civil Procedure.

3. The present plaintiff H. S. Vedi, Mr. K. S. Kler and one Mr. K. K. Duggal had entered into partnership agreement in Gulf countries and they were carrying out business in Gulf countries. Out of these three partners Shri K. K. Duggal expired and thereafter his widow Vina Duggal has filed suit No. 207/86 and two petitions under Section 20 of the Arbitration Act in this Court and all these proceedings taken up by widow of Mr. K. K. Duggal are pending. In those proceedings present petitioner H. S. Vedi and respondent K. S. Kler were defendants and they were represented by advocate Mr. Devinder Nath. When said Devinder Nath was representing them, a document took place on 20th December, 1986. The said document is an agreement containing arbitration Clause. Plaintiff H. S. Vedi has come before this Court on this OMP No. 147-A/87 denying and disputing the existence, validity and legality of the said alleged agreement by filing proceedings under Section 33 of the Arbitration Act. This proceedings is filed by him on 16th December, 1987. After he filed the said proceedings, he had also sought an order of injunction against the arbitrators/respondents Nos. 2 and 3 in that proceedings and was in a position to get an ex parte order on I8th December, 1987. But before the service of the said order, the arbitrators had passed an award as per their claim on 17th December, 1987 and suit No. 415-A/88 is filed in this Court to get a decree in terms of the award.

4. The present petitioner Mr. H. S. Vedi is served in the said suit No.415-A/88 and within 30 days he has filed his objection under Sections 30 as well as 33 of the Arbitration Act in the said suit and has challenged and disputed the said award.

5. By this application, petitioner H. S. Vedi wants me to allow him to amend his petition so as to raise objections under Sections 30 as well as 33 of the Arbitration Act to challenge and dispute the award passed by the arbitrators. The claim of the petitioner is resisted by the respondents and it is their main contention that when the award has been passed by the arbitrators, the application under Section 33 of the Arbitration Act challenging the existence, legality and validity of the said arbitration has become infructuous and when the main application has become infructuous, the present application for amendment be rejected.

6. Therefore, the only point which arises for my consideration is as to whether the amendment sought by the petitioner is to be allowed and my finding on the same point is in the negative for the reasons herein below.

7. I will first deal with the contention of the respondent that the-present application OMP No. 147-A/87 has become infructuous on account of filing of the award by the arbitrators. Admittedly, the petitioner has filed the application under Section 33 of the Arbitration Act challenging and disputing the existence of the agreement for arbitration as well as its legality and validity prior to the date of the award. If the provisions of Section 33 of the Arbitration Act are read carefully then it would be quite clear that under the said Section 33 of the Arbitration Act, it is open for a party to the agreement to challenge the existence as well as the validity of the arbitration agreement. The said challenge of the party would not come to an end merely because the arbitrator happened to pass an award. Even the provisions of Section 33 are carefully read along with provisions of Sections 30 and 15 of the said Act, then it would be quite clear that a party to an agreement of arbitration is nowhere barred from challenging the existence of the agreement for arbitration on account of passing of the award under the said agreement. Therefore, it could not be said that merely because the arbitrators have passed an award, the petitioner's petition under Section 33 of the said Act challenging the existence of the agreement as well as the validity and legality of the agreement of arbitration.

8. The petitioner has filed the original petition on 16th December, 1987. The petitioner has challenged the existence, legality and validity of the agreement to the arbitration and on the date of his petition, the award was not passed by the arbitrators. By the amendment, the petitioner wants to incorporate in this application certain grounds to challenge and dispute the legality and validity in the award passed by the arbitrators. It is settled law that once an amendment is allowed, the amendment relates back to the date of the original application. Therefore, if the present amendment of the petitioner happens to be allowed, then the said amended petition will stand filed on 16th December, 1987, but on that date, the award was not in existence. When award came into existence on 17th December, 1987, there was no question of challenging and disputing its legality and validity on 16th December, 1987. Therefore, in these circumstances, the amendment in question could not be allowed.

9. It must be further mentioned here that admittedy, after passing of the award suit No. 415-A had been filed, to pass a decree in terms of the award and the present petitioner has been served with summons in the said suit and he has filed objections to the said award by raising contentions as permitted by Sections 30 as well as 33 in the said suit. Therefore, in view of these circumstances, the contentions of the learned advocate for the petitioner that this Court should take congnizance of subsequent events of the filing of the award by the arbitrator and allow him to amend his petition could not be accepted. Because by not allowing him to raise the contentions on the basis of the provisions of Section 33 of the Arbitration Act in this proceedings, no prejudice or injury would be caused to the petitioner on account of the happening of the subsequent events as the petitioner has already filed his objection in suit No.415-A/88.

10. In the case of Jawahar Lal v. Union of India, , their Lordships have observed in para No. 8 on page 382 as under :--

"(8) Before answering this question we may conveniently consider the scope of Section 33 and its effect. Section 33 consists of two parts. The first deals with a challenge to the existence or validity of an arbitration agreement or an award, and it provides that the persons therein specified can apply to the Court to have a decision on its challenge to the existence or validity of an arbitration agreement or an award. In other words, there is no doubt that it is only persons who challenge the existence of the arbitration agreement that can apply under the first part of Section 33. This position is also not disputed. The second part of the section refers to applications made to have the effect to either the arbitration agreement or the award determined. The question which we have to consider is whether a person affirming an arbitration agreement can apply under the latter part of Section 33. Even assuming that the requirement that an application can be made under the first part of Section 33 only by persons desiring to challenge the arbitration agreement does not apply to its latter pan, it is difficult to hold that an application to have the effect of the arbitration agreement determined can legitimately cover the dispute as to the existence of the said arbitration agreement. It is clear that the first part of Section 33 refers to the existence or validity in terms and Sections 31 and 32 also refer separately to the existence, effect or validity. Therefore, the effect of an arbitration agreement is treated as distinct from the existence of the agreement, and where it was intended to refer to the existence as well as the effect of such an agreement both the words "existence and effect" have been specifically used. Thus, under the latter part of S. 33 an application can be made to have the effect or purpose of the agreement determined but not its existence. That means that an application to have the effect of the agreement can be made provided the existence of the agreement is not in dispute. Besides, if a person affirming the existence of an agreement is held entitled to apply to the Court under the latter part of S. 33 for getting a declaration about the said existing agreement then the first part of S. 33 would be wholly superfluous. Therefore, it seems to us that a party affirming the existence of an arbitration agreement cannot apply under S. 33 for obtaining a decision that the agreement in question exists. In fairness, we ought to add that the learned Solicitor General, who appeared for the respondent, did not dispute the position."

11. If the above observations made by the apex Court are taken into consideration, along with the circumstances of this case, then it would be quite clear that the present amendment sought by the petitioner could not be allowed.

12. The learned Advocate for the petitioner has cited the cases of U.I.F. & G. Insurance Co. v. Bhagat Singh, ; Jugal Das Damodar & Co. v. Pursottam Umedbhai & Co., and Hindustan Steel Ltd. v. Kaushal Construction Co., . If the facts of all these cases are considered, then it would become quite clear that in all these three cases, awards were passed and one of the parties to the said agreement for arbitration had challenged the award by raising contentions under Sections 30 as well as 33 and in these cases it has been held that merely because there is rejection of the contention under Section 30, the contention of the parties under Section 33 would not be rejected. The Court will have to consider the objection raised under Section 33 and record its finding regarding the objections raised under Section 33 including the objection regarding the validity and existence of the agreement to the arbitration. Therefore, these cases are not applicable on facts to the case before me. He has also cited before me the case of R. G. Insurance Co. v. Pearey Lal, . But the said case has also no bearing on the facts before me.

13. The contention raised by the petitioner regarding the existence, Validity and legality of the agreement for arbitration will have to be gone into and considered along with the objections filed by him in Suit No.415-A/88. But it is not all necessary to allow the amendment in this petition. I therefore reject the present petition. I direct both the parties to give the draft issues and fix the date for settlement of issues in this matter as well as in suit No. 415-A/88 of 14th of August, 1995.

14. Petition dismissed.