LODHA, J. - (1.) THIS is a first appeal by the defendants arising out of a suit for recovery of damages on account of the alleged breach of contract on their part to take delivery of 485 bales of gunny bags which they had contracted to purchase from the plaintiffs. In order to appreciate the various questions which have been canvassed on behalf of the appellants, it would be necessary to set out the facts leading to this litigation.
(2.) THE case of the plaintiff-respondents is that they carry on business at Sambhar along with one Ramvallabh who has been made a proforma-defendant, and defendants Nos. l to 3 also carry on business at Sambhar under the name and style Firm Birdhichand Sumermal, which is a partnership firm. It is alleged by the plaintiffs that on Magh Badi 4, Smt. 2003 equivalent to 10-1-47 the defendant firm Birdhichand Sumermal purchased bales of gunny bags from the plaintiffs in two lots to be delivered on Fagan Sudi Poonam, Smt. 2003 equivalent to 7-3-47, one of 225 bales at the rate of Rs. 80/14/- per hundred bags and the other of 260 bales at the rate of Rs. 80/15/- per hundred bags. Thus, the total contractual price of these 485 bales of gunny bags came to Rs. 1,96,203/2/ -. It was averred in the plaint that this transaction was entered into between the parties according to the usage prevalent in the market with respect to such transactions. It was specifically stated that according to the usage, the delivery of the bales could be given and taken within a period of five days from the due date i. e. upto Badi 5th of the next month* THE plaintiffs' case is that the defendants neither offered the price of the bales nor came forward to take delivery of the same. Consequently, oh Chait Badi 1, i. e, 8-3-47, the plaintiffs gave a registered notice to the defendants to take delivery of the bales which were lying in their godown on payment of the price. A copy of this notice has been placed on the record and marked Ex. 11. This notice was delivered to the defendants on 10-3-47 and the postal acknowledgment signed by one Champalal on behalf of the defendants has been placed on the record and marked Ex. 10. THE defendants, however, did not give any reply to this notice and, therefore, another notice was given by the plaintiffs to the defendants on 12-3-47 asking the latter that they may take delivery of the stipulated bales on 13-3-47 on payment of price of the same to the Punjab National Bank Ltd. , Sambhar. This notice was delivered to the defendants on 13-13-47. A copy of this notice has been marked Ex. 14 and the postal acknowledgment of the same is Ex. 13. THE plaintiffs go on to state that even the second notice proved ineffectual and thus the defendants committed breach of contract. THE plaintiffs, therefore, gave a third notice to the defendants on 14-3-47 informing them that 485 bales which the defendants had agreed to purchase but had failed to take delivery of the same, would be auctioned in the market. This notice was delivered at the defendants' firm on 15-3-47 and its postal acknowledgment dated 15-3-47 has been placed on the record and marked Ex. 18. Even then the defendants did not reply and consequently the plaintiffs, it is alleged, gave a fourth notice on 15-3-47 informing the defendants that the bales would be auctioned on 16-3-47. THE plaintiffs' case is that when the defendants did not turn up to take delivery of the bales nor did they care to reply to any of the notices served by the plaintiffs on them, the bales of gunny bags were auctioned in the market and since the market price of these bales had considerably gone down, the plaintiffs were able to recover only Rs. 1,70,125/- as price of these bales and were thus put to a loss of Rs. 26078/2/ -. To this, they added Rs. 121/-on account of commission, Rs. 1/2/- by way of miscellaneous expenses and Rs. 6080/1/3 as interest by way of damages at the rate of ten annas percent per month and thereby claimed a total sum of Rs. 32,280/9/3. THE plaintiffs also stated in para No. 12 of the plaint that the parties had made a reference to the arbitrator Shri Ramnarain Jajoo on 14-4-47 and the arbitrator gave an award on 26 4-47 according to which the defendants were made liable to pay Rs. 26, 199/6/- as damages to the plaintiffs. But the defendants did not comply with the award. THE plaintiffs also claimed pendente lite and future interest at the rate of ten annas percent per month. Ramvallabh, defendant No. 4, who was made a proforma defendant denied that he was a partner of the defendant's firm and pleaded complete ignorance about the transaction in suit. Defendant No. 2 Gambhirmal filed a written statement on behalf of himself as well as the firm defendant No. 1. It was admitted that a contract for sale and purchase of 485 bales of gunny bags had been entered into between the plaintiff firm and defendant-firm as pleaded in the plaint, but the receipt of the various notices as alleged by the plaintiffs was denied. The defendants asserted that they had not committed any breach of contract and that the plaintiffs had not been put to any loss on account of this transaction. It was further pleaded that the plaintiffs had no ready bales of gunny bags with them to be delivered in pursuance of the contract and thus the plaintiffs were neither ready nor willing to perform their part of the contract. It was asserted by the defendants that they had sent their man on the due date, namely, Fagan Sudi Poonam, Smt. 2003, to take delivery of the bales from the plaintiffs but the plaintiffs had no bales with them and were thus not at all in a position to perform their part of the contract. As regards the quantum of damages, it was pleaded that the plaintiffs were only entitled to get the difference between the contractual rate and market rate prevalent on the due date or upto the extended date. The defendants also denied having appointed Shri Ramnarain Jajoo as an arbitrator as well as the award, if any, were incompetent and, in the alternative, it was further pleaded that if any award is held to have been given, the suit by the plaintiffs is not maintainable. The trial court framed fourteen issues in all and after recording the evidence produced by the parties, the learned Senior Civil Judge, Jaipur District, Jaipur, decreed the plaintiffs' suit in part and held that the plaintiffs are entitled to receive Rs. 16, 753/2/ as damages from the defendants. It was further directed that the decretal amount will carry interest at the rate of three percent per annum from the date of the suit, that is, 3-2-50, upto the date of payment. The rest of the plaintiffs' claim was dismissed. Aggrieved by the judgment and decree of the trial court, the defendants alone have filed this appeal, but the plaintiffs have not preferred any appeal with respect to that part of their claim which has been dismissed by the trial court nor have they filed any cross-objection. Mr. Joshi, learned counsel for the appellants, has urged the following points: -. (5) that the plaintiffs could not have brought a suit on the basis of the original cause of action as the same had merged in the award pleaded by the plaintiffs themselves in para no. 12 of the plaint and, therefore, the suit is incompetent. . . . . . . . . . . . . . . . . . . . . . . . . . . . It now remains to deal with the last point urged by the learned counsel for the appellants, namely, that in view of the fact that the plaintiffs had pleaded a private award, the present suit on the basis of the original cause of action is not maintainable. In para 12 of the plaint it is stated that in respect of the bales of gunny bags in dispute, the parties had referred the matter on 14-4-47 for arbitration to Ramnarain Jajoo who gave the award on 26-4-47 and declared that the plaintiffs are entitled to recover Rs. 26,199/6/- as damages from the defendants, but the defendants did not pay anything. In the written statement filed by the contesting respondents, they pleaded that they did not submit the matter for arbitration to Ramnarain Jajoo, and Tikamchand, another partner of the defendant-firm, had no authority on behalf of the defendant firm and defendant No. 2 Gambhirmal to appoint Ramnarain Jajoo as arbitrator. It was, therefore, urged that the arbitration proceedings were against law and not binding on the defendants and the plaintiff No. 1 himself having declared the arbitration proceedings as illegal and void, is not bound by the same. In para No. 21 of the written statement, the defendants have further pleaded that, as averred by the plaintiffs themselves, if there has been an award with respect to the matter in dispute, then the plaintiffs' suit is incompetent in face of the award. On these pleadings, the trial court framed Issues Nos. 8 and 9 which read as below : "issue No. 8 - Whether the parties to the suit by a valid agreement dated 14-4 47 appointed Ramnarain Jajoo as their arbitrator ? Issue No. 9 - Whether the arbitrator Ramnarain by his award directed the defendants to pay the plaintiffs the sum of Rs. 26199/6/- ?" The plaintiff in his statement as P. W. 12 has stated that a written agreement to refer the matter for arbitration to one Ramnarain was executed and that Ramnarain had given a written award. There being no other evidence on record in this respect, the trial court held that the agreement for appointment of Ramnarain Jaju as an arbitrator was not proved. It decided both the issues Nos. 8 and 9 against the plaintiffs in view of the fact that neither the agreement for arbitration nor the alleged arbitrator Ramnarain had been produced. It is submitted by the learned counsel for the appellants that, in the first instance, the plaintiffs' suit is virtually a suit to enforce an award and is thus clearly barred under sec. 32 and 33 of the Indian Arbitration Act No. X of 1940. In the second place, it is urged that even if it is considered as a suit based on the original cause of action, it is not maintainable, as a valid award operates to merge and extinguish all claims embraced in the submission, and after it has been made, the submission and award furnish the only basis by which the rights of the parties can be determined and constitute a bar to any action on the original demand.
(3.) ON the other hand, Mr. Parikh, learned counsel for the respondents, has urged that the plaintiffs do not seek to enforce the award by this suit nor the award has been made the basis of the suit. He submits that the suit has been based on the original cause of action His contention is that after the coming into force of the Indian Arbitration Act No. X of 1940, the passing of an award by itself does not extinguish the rights of the parties until such award is subjected to the process mentioned in the Act and, therefore, the present suit based on the original demand is maintainable. He has also contended that the lower court has come to a positive finding that neither an agreement to refer the subject-matter of dispute to arbitration nor the award have been proved. He has also invited our attention to the Grounds of Appeal filed by the defendants in this Court and has submitted that the finding given by the lower court in this respect has not been challenged and, therefore, it must be assumed for the decision of this appeal that there was neither an agreement for referring the subject-matter of dispute to arbitration nor any award was made. It is true that even though the plaintiffs pleaded in the plaint that the matter in dispute had been referred to the arbitration of one Ramnarain Jaju who had also given an award, but the plaintiffs did not produce any substantial evidence in support of this allegation except the bald statement of P. W. 12 Ramdeo to the effect that one Ramnarain was appointed as an arbitrator by the parties by a written instrument and a written award had been given by him. Thus, on this scanty material, the lower court, in our opinion, was justified in coming to the conclusion that the plaintiffs had failed to prove that there was any agreement to refer the subject-matter of dispute to arbitration or that any award had been given in this respect. In this view of the matter a question of extinguishment of the original cause of action does not arise at all, and the argument of Mr. Joshi can be disposed of on this finding alone that there was no agreement to refer the subject matter of the dispute to arbitration and there was no award at all. But Mr. Joshi has argued that when the plaintiff has himself admitted that there was an award with respect to the subject matter in dispute even in absence of any proof to that effect the plaintiffs would be debarred from relying on the original cause of action as according to Mr. Joshi, the correct legal position is that an award even if not made a rule of the Court would operate to extinguish the original cause of action. We would, therefore, address ourselves to the question whether an unfiled award would operate as a bar against a party to bring a suit on the original cause of action? It has been candidly conceded by Mr. Parikh, learned counsel for the respondents, that after the coming into force of the Arbitration Act No. X of 1940, no suit can be filed to enforce a private award. This position is clear by virtue of the provisions contained in sec. 32 and 33 of the Arbitration Act of 1940 and we may reproduce these sections below for ready reference : "sec. 32 - Bar to suits contesting arbitration agreement or award - 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 affected otherwise than as provided in this Act ?" "sec. 33-Arbitration, agreement or award to be contested by an application - Any party to an 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. " It has been held in a series of authorities that after the coming into force of the Arbitration Act, of 1940, no suit lies to enforce an award and to quote a few, we may refer to Narbadabai vs. Natverlal Chunilal Bhalakia (19), Sia Kishori Kuer vs. Bhairvi Nandan Sinha (20), Firm Gulzarimal Gheesalal vs. Firm Rameshchandra Radheshyam (21) and Kanhyalal Vishweshwarlal Mahajan vs. Ramchandra Shankar Rao Holkar (22 ). In our view, this position does not admit of any doubt even on a bare perusal of the scheme of the Arbitration Act itself. Sec. 2. clause (c) of the Arbitration Act provides that "court" means a Civil Court having jurisdiction to decide the questions forming the subject-matter of the reference, if the same had been the subject-matter of a suit, but does not, except for the purpose of arbitration proceedings under sec. 21, include a Small Causes Court. Sec. 32 clearly 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 affected otherwise than as provided in this Act. Consequently, a court proceeding to hear a suit for enforcement of an award will be acting without jurisdiction since, as a court of general jurisdiction, its jurisdiction to hear the cases of such nature is curtailed by the provisions of this Act. We, therefore, do not think it necessary to pursue this aspect of the case any further and accept the contentions of the learned counsel for the appellants that a suit for enforcement of an award after the coming into force of the arbitration Act, 1940 cannot lie. The question therefore arises whether the present suit is one for enforce-ment of the award. But for the fact that a reference has been made in para No. 12 of the plaint that an arbitration agreement had been made and an award had been given, there is nothing else in the plaint to show that the plaintiffs relied upon the alleged arbitration agreement and award for obtaining any relief against the defendants. They have claimed the amount of damages not on the basis of the alleged award but on the original cause of action. The amount of damages they have claimed is undoubtedly the same, which, according to them, was arrived at by the arbitrator, but to that amount, they have added certain more items. They have narrated in the plaint full facts right from the commencement of the agreement between the parties for sale and purchase of the goods in question and have thus based the suit on the original demand. In Para No. 15 of the plaint pertaining to the cause of action, the plaintiffs have specifically stated that it arose between 12-3-1947 and 16-3-1947 at Sambhar when the defendants committed breach of contract and the goods were resold by the plaintiffs in the market. It is significant that neither the alleged date of appointment of the arbitrator nor the alleged date of award by the arbitrator have been pleaded as constituting the cause of action for filing the suit. Thus, we find it difficult to accept the contention advanced by Mr. Joshi that the present suit is not a suit for enforcement of the award. ;