- (1.) THIS is a second appeal by the plaintiff Moolchand whose suit has been dismissed by the District Judge, Ajmer on the ground that it is not main-tainable under the provisions of the Arbitration Act No. 10 of 1940.
(2.) THE facts of the case may be stated within a short compass. THE respondent Manakchand obtained a decree for Rs. 8000/- against the appellant Moolchand from the Court of Sub Judge, First Class, Beawar on 10-5-1954 on the basis of an award dated 26-4-1954. This decree was subsequently amended on 30-12-1954. THE present suit was filed by Moolchand on 9-5-1955 for setting aside the decree dated 39-12-54 as being fraudulent, null and void. It was alleged in the plaint that the plaintiff Moolchand had neither executed any arbitration agreement in favour of the alleged arbitrator Shri Jagdish Prasad nor there had been any valid award against him. He stated that he was a servant of the defendant at his shop on a monthly salary of Rs. 35/- and had not borrowed any money from Manakchand. It was further alleged that he had not appointed Shri Mukand Chand Ranka as his counsel nor had signed Vakalatnama in the latter's favour nor he had made any application for amendment of the decree. THE plaintiff also alleged that he had not received any notice of the arbitration proceedings nor had ever appeared before the alleged arbitrator Shri Jagdish Prasad. THE plaintiff, it is alleged, got knowledge of the decree passed against him on the basis of the award only when he received a notice under O. 21, r. 66, Civil P. C. In short his case was that a complete fraud had been played upon him and the decree thus obtained by perpetrating fraud not only upon him but on the Court also was liable to be rescinded. THE averments made by the plaintiff' in the plaint were stoutly denied by the defendant Manak Chand in his written statement. After recording the evidence produced by the parties, the learned Civil Judge, Beawar by his judgment dated 30-5 1959 held that the decree obtained against the plaintiff Moolchand in civil suit No. 94 of 1954 by the Sub-Judge, First Class, Beawar dated 10-5-1954 and subsequently amended on 30 5-1954 was fraudulent, null and void and was inexecutable against the plaintiff. Consequently the plaintiff's suit was decreed and a perpetual injunction was granted against the defendant Manakchand not to execute the impugned decree against the plaintiff. Dis-satisfied with the judgment of the Civil Judge, Beawar the defendant Manak Chand filed appeal in the court of District Judge, Ajmer, who as already stated above, held that the plaintiff's suit was not maintainable- and in this view of the matter without going into other questions, allowed the defendants' appeal, set aside the judgment and decree of the trial court and dismissed the plaintiff's suit. It is under these circumstances that the plaintiff has come in second appeal to this Court. Thus the only point for decision in this appeal is whether the plaintiff's suit is maintainable? Learned counsel for the appellant has urged that the view of the learned District Judge that the suit is barred under secs. 32 and 33 of the the Arbitration Act, 1940 (which will hereinafter be called as "the Act") is erroneous. In support of his contention he has relied upon Banwarilal vs. Hindu College, Delhi (l), State of Bombay vs. Adamjee & Co. (2) Manicklal Memani vs. Shiva Jute Bailing Ltd. (3) and Baijnath vs. Chhotu]al (4 ). On the other hand learned counsel for the respondent has strenuously urged that the only course open to the plaintiff Mool Chand for avoiding the impugned decree passed on the basis of the award was to have filed an application under sec. 35 of the Act, as a regular suit for setting aside such a decree is barred under sec. 32 of the Act. In support of his contention he has placed strong reliance on Basantlal vs. Surendra Prasad (5), which according to the learned counsel, is on all fours with the present case. He has also placed reliance on Chaturbhuj Mohanlal vs. Bbicam Chand (6), M/s. Vallabh Pitte vs. Narsingh Das (7) and Sambandam vs. 1 he General Manager, South Indian Railway (8 ). For a correct appraisal of the arguments of the learned counsel for the parties it would be proper to summarise in some detail the allegations contained in the plaint. It is alleged by the plaintiff that he never appointed Shri Jagdish Prasad as an arbitrator nor signed or subscribed his signature to any deed of reference in favour of Shri Jagdish Prasad, nor he signed any award alleged to have been made on 26-4-1954. It has been further stated by him that he did not receive any notice from the arbitrator nor appointed Shri Mukand Chand Ranka as his counsel, nor signed any Vakalatnama in his favour, nor made any application to the Court for amending the decree. It has also been alleged that he was made to sign his signature over a paper on a false representation made to him that his signatures were required for the purposes of writing out an agreement of his service under the plaintiff. It was alleged that the defendant Manakchand had entered into a conspiracy with one Pannalal and the Advocates Shri M. C. Ranka and Bhanwarlal Ranka and the alleged arbitrator Shri Jagdish Prasad as a result of which the impugned decree was obtained against him by fraud. To put in brief he has alleged fraud from the stage of coming into existence of the arbitration agreement upto the stage of decree being passed against him. At this stage it would be proper to refer to the relevant sections of the Arbitration Act which have been pressed into service by the learned counsel for the respondent in support of his contention, that the suit is barred, Sec. 32 reads as under: "32. Notwithstanding any law for the time being in force, 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 effected otherwise than as provided in this Act. " Section 33 runs as follows: - "33. Any party to on arbitration agreement or any person claiming under him desiring to challenge the existence or validity of an arbitration agreement or an award or to have the effect of either determined shall apply to the Court and the Court shall decide the question on affidavits; Provided that where the Court deems it just and expedient it may set down the application for hearing on other evidence also, and it may pass such orders for discovery and particulars as it may do in a suit. " A bare perusal of sec. 32 makes it crystal clear that no suit shall lie on any ground whatsoever for a decision upon the existence effect or validity of an arbitration agreement or award and an arbitration agreement or award can be set aside, amended or modified or affected in any other way only according to the provisions in the Act. Sec. 33 further provides that if a party to an arbitration agreement or any person claiming under him desires to challenge the existence or validity of an arbitration agreement or an award, he must make an application to the Court which shall decide the question on affidavits or may record other evidence if it thinks fit to do so. Thus there is no doubt that the only remedy provided under the Act for challenging the existence or validity of an arbitration agreement or an award on any ground whatsoever is by an application under sec. 33 of the Act. The position appears to me so very clear that I do not consider it necessary to refer to any case law on the point. But the question which calls for determination is as to what is the remedy if a judgment or decree is passed on the basis of an award, and the allegation of a party is that the judgment and decree have been obtained against him by practising fraud on him as well as on the Court not only prior to obtaining the award, but even thereafter? However, before I address myself to this question, I may advert to another branch of the argument advanced on behalf of the appellants that the words "any party to an arbitration agreement" used in sec. 33 refer only to a party in fact and not the alleged party who denies to have executed an arbitration agreement.
(3.) IN Nanick Lal Memani vs. Shiv Jute Bailing Ltd. (3) the learned Judge observed as follows - "that section (i. e. sec. 33) enjoins that a party to an arbitration agreement desiring to challenge the existence or validity of an arbitration agreement or to have the effect thereof determined must apply to the Court. This section proceeds on the basis of the factual or an apparent existence of an arbitration agreement and contemplates the case of a party to such arbitration agreement coming to Court and seeking to challenge its legal existence on the ground of mistake, fraud, misrepresentation, coercion, illegality or like grounds to be found in secs. 19 to 30 of the Contract Act. The case of Deokinandan Dalmia vs. Basanti Lal Ghanshyamdas (45 C. W. N. 881, 1941) decided by Lord Williams, J. , dealt with such a situation. But a person who alleges that he never entered into an arbitration agreement cannot possibly be said to be a part to an arbitration agreement so as to come within the purview of sec. 33. " The same view was taken by another Judge of the Calcutta High Court in another case contained in the same volume: Baijnath vs. Chhotulal (4 ). This view, however, does not seem to have found favour subsequently with another Judge of the Calcutta High Court in Chaturbhuj Mohanlal vs. Bhicam Chand (6), and it was observed in this judgment that the words "any party to the arbitration agreement" should be read in a sense other than in its strict and literal sense and should be construed to mean a party who is alleged to be a party to the arbitration agreement but who challenged the existence thereof. The word "existence" according to the learned Judge should not be read in a restricted sense but in its ordinary and natural meaning, namely, existence either in fact or in law. In Basantlal vs. Surendra Prasad (5) it was held by the learned Judges of the Patna High Court that "the words any party" with which sec. 33 of the Act opens, contemplate and include persons alleged to be parties, though they may not be actually parties, and, therefore, they mean also persons who are not alleged to have entered into the arbitration agreement. Likewise, the word "agreement" includes a sham agreement, and means factual existence of the agreement although, it may have or it may turn out to have no legal existence at all. " ;