{"id":207707,"date":"1973-07-18T00:00:00","date_gmt":"1973-07-17T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/hari-krishan-wattal-vs-vaikunth-nath-pandya-on-18-july-1973"},"modified":"2015-09-20T18:05:31","modified_gmt":"2015-09-20T12:35:31","slug":"hari-krishan-wattal-vs-vaikunth-nath-pandya-on-18-july-1973","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/hari-krishan-wattal-vs-vaikunth-nath-pandya-on-18-july-1973","title":{"rendered":"Hari Krishan Wattal vs Vaikunth Nath Pandya on 18 July, 1973"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Hari Krishan Wattal vs Vaikunth Nath Pandya on 18 July, 1973<\/div>\n
Equivalent citations: 1973 AIR 2479, \t\t 1974 SCR (1) 259<\/div>\n
Author: D Palekar<\/div>\n
Bench: Palekar, D.G.<\/div>\n
           PETITIONER:\nHARI KRISHAN WATTAL\n\n\tVs.\n\nRESPONDENT:\nVAIKUNTH NATH PANDYA\n\nDATE OF JUDGMENT18\/07\/1973\n\nBENCH:\nPALEKAR, D.G.\nBENCH:\nPALEKAR, D.G.\nALAGIRISWAMI, A.\n\nCITATION:\n 1973 AIR 2479\t\t  1974 SCR  (1) 259\n 1973 SCC  (2) 510\n CITATOR INFO :\n F\t    1985 SC 920\t (11)\n\n\nACT:\nArbitration Act (10 of 1940) s. 28 and cl. (3) of  Schedule-\nScope of.\n\n\n\nHEADNOTE:\nDisputes  having  arisen  between  the\tappellant  and\t the\nrespondent, they were referred to arbitration in  accordance\nwith  the  agreement entered into between the  parties.\t The\narbitrator gave his award. The appellant applied for  filing\nof  the award into Court and for making it a rule of  Court.\nThe validity of the   award   was  challenged\tby   the\nrespondent,  and the trial Court and the High Court  set  it\naside on the grounds\n(1) that the award was made after the prescribed period\t and\n(2) that theagreement  for arbitration was  defective  on\naccount of vagueness and uncertainty.\nAllowing  the appeal to this Court and remanding the  matter\nto the High Court for disposal.\nHELD : (1) Under cl. (3) of the Schedule to the\t Arbitration\nAct, 1940,the arbitrator is expected to make his  award\nwithin\tfour months of his entering on the reference  or  on\nhis being called upon to act or within such extended time\nas the Court may allow. Reading the clause with s. 28 of the\nAct the power to enlarge the time for making the award\tis\nvested, in the Court and not in the arbitrator. Section\n28(2), however, indicates an exception. namely when   the\nparties\t agree\tto  such enlargement  after  the  arbitrator\nenters on the arbitration. But the section does not require\nthat the parties should stipulate in\tthe\tarbitration\nagreement  itself,  for\t such  enlargement  of\ttime  by  a,\nsubsequent agreement. Even in a case where there is no\tsuch\nstipulation in the original  agreement\tthe  arbitrator\t is\nentitled to enlarge the time if after entering\ton     the\nreference  the\tparties to the arbitration consent  to\tsuch\nenlargement.[261G-H; 262A-D]\nIn  the present case the enlargement of time for making\t the\naward wason  the request and mutual consent of the  parties\nduring arbitration, and therefore, the award made within the\nextended time must be deemed to be valid. [263A-C]\n(2)  A\tperusal of the agreement in the\t background  of\t the\ndisputes that had  arisen  shows  that\tthe  agreement\twas\nneither vague nor uncertain. In fact,the  parties   never\ncomplained  before the arbitrator of any such  vagueness  or\nuncertainty.\n[263C; 264B]\n\n\n\nJUDGMENT:\n<\/pre>\n
CIVIL  APPELLATE  JURISDICTION : Civil Appeal  No.  1433  of
\n1967.\n<\/p>\n
Appeal\tby special leave from the judgment and\torder  dated
\nDecember 7, 1966 of the Allahabad High Court in F.A.F.O.  31
\nof   1963.\n<\/p>\n
B. D. Sharma, for the appellant.\n<\/p>\n
Hardayal  Hardy.  Madhav Prasad and M. V. Goswamy, for\tres-
\npondents 1 (a) to 1 (e).\n<\/p>\n
The Judgment of the Court was delivered by
\nPALEKAR, J.-This is an appeal by special leave from an order
\nof  the High Court at Allahabad dated December 7,  1966,  by
\nwhich  the  Court,  in\tagreement  with\t the  trial   court,
\nsuperseded a Reference to Arbitration.\n<\/p>\n
260<\/span><\/p>\n
Hari  Krishna  Wattal and Vaikunth Nath\t Pandya\t carried  on
\nbusiness in partnership under the name and style of  ‘Wattal
\n& Co.’. Differences having arisen between them, a  reference
\nwas made to the Arbitrator in accordance with the  agreement
\nunder  the partnership deed.  The Arbitrator,  Shri  Bagchi,
\nAdvocate,  gave\t an award and Hari Krishna  Wattal  applied
\nunder  section 14 of the Arbitration Act for filing  of\t the
\naward  and for making it a rule, of the\t Court.\t  Objections
\nwere   filed  by  Vaikunth  Nath  Pandya.   The\t award\t was
\nchallenged  on\tseveral\t grounds.  The Court  of  the  first
\ninstance  held inter-alia that the award dated February\t 27,
\n1959 was invalid on the ground, firstly, that the award\t had
\nbeen passed after the prescribed period for making the award
\nand secondly that the reference\t agreement was defective  on
\naccount\t of vagueness and uncertainty.\tHari Krishna  Wattal
\nfiled an appeal in the High Court.  The learned Single Judge
\nwho heard the appeal agreed with the trial-court on the\t two
\nabove grounds and superseded the reference.
\nIt  is contended by Mr. Sharma that both the Courts were  in
\nerror in holding that the award was invalid on the aforesaid
\ngrounds.\n<\/p>\n
Ex.  13 is the agreement to refer the disputes between\tthe,
\nparties.  The agreement is dated 5-2-1958 and the award,  as
\nalready\t stated, was made much beyond four months  from\t the
\ndate of the reference. Prima-facie it will be invalid unless
\nthe  time for enlargement for making the award\twas  legally
\nextended.   It is contended for the appellant that the\ttime
\nhad  been legally extended by the mutual written consent  of
\nthe  parties  and hence the award was not liable to  be\t set
\naside.\t It  will appear from the record that the  time\t was
\nextended  not less than six times.  The first extension\t was
\nfrom 31-5-1958 to 31-7-1958 and the last extension was\tfrom
\n29-1-1959  to 28-2-1959.  None of these six extensions’\t was
\nfor  the  benefit of the appellant.   Five  extensions\twere
\ngiven for the convenience of the respondents and one for the
\nconvenience  of the Arbitrator.\t On each occasion,  however,
\nthe appellant and the respondents had mutument agreed to the
\nextension in writing.  The agreement for enlargement of time
\nwas generally in the following terms
\n “IT IS THEREFORE AGREED BETWEEN THE PARTIES AS BELOW
\n\t      (1)   That  Shri\tA.  K.\tWattal,\t constituted
\n\t      attorney for Shri H. K.\tWattal\t and\tShri
\n\t      Vaikunth\tNath  Pandya agree to  give  further
\n\t      time  to the Arbitrator to give his  award  on
\n\t      any date till the 31st of July, 1958.\n<\/p>\n
\t      (2)   That the said parties further agree that
\n\t      they  would accept such award, if given on  or
\n\t      before  31st of July 1958, as a  valid  award,
\n\t      and would not raise any objection on the score
\n\t      of  its  having  been  delivered\tbeyond\tfour
\n\t      months of the reference to arbitration.”
\nIt is not disputed that if such mutual agreement between the
\nparties to the arbitration was capable of legally  effecting
\nthe enlargement of
\n261<\/span>
\ntime  for  making  the award then the  award  could  not  be
\nchallenged  on\tthe  particular\t ground\t that  it  had\tbeen
\ndelivered beyond four months of the reference.
\nSection 3 of the Arbitration Act, 1940, provides
\n\t      “An arbitration agreement, unless a  different
\n\t      intention\t is  expressed\ttherein,  shall\t  be
\n\t      deemed  to include the provisions set  out  in
\n\t      the  First  Schedule  in so far  as  they\t are
\n\t      applicable to the reference.\n<\/p>\n
\t      The  First Schedule has 8\t clauses  describing
\n\t      the  implied  conditions\tof  an\t arbitration
\n\t      agreement.  Clause 3 reads as follows :\n<\/p>\n
\t      “The arbitrators shall make their award within
\n\t      four months after entering on the reference or
\n\t      after having been called upon to act by notice
\n\t      in  writing from any party to the\t arbitration
\n\t      agreement or within such extended time as\t the
\n\t      Court may allow.”\n<\/p>\n
\t      The   power  of  the  Court  to  extend\ttime
\n\t      contained in section 28, which is as follows :
\n\t      “28.  Power to Court only to enlarge time\t for
\n\t      making award. (1) The Court may, if it  thinks
\n\t      fit, whether the time for making the award has
\n\t      expired or not and whether the award has\tbeen
\n\t      made  or\tnot, enlarge from time to  time\t the
\n\t      time for making the award.\n<\/p>\n
\t      (2)   Any\t  provision   in   an\t arbitration
\n\t      agreement\t whereby the arbitrators  or  umpire
\n\t      may,  except  with  the  consent\tof  all\t the
\n\t      parties to the agreement, enlarge the time for
\n\t      making  the  award, shall be void\t and  of  no
\n\t      effect.”\n<\/p>\n
The  High Court was of the opinion that there are  only\t two
\nmethods\t for  enlarging\t the  time.   The  first  method  is
\nsecuring an order from the Court and the second method is to
\nstipulate in the arbitration agreement for extension of time
\nby  a  subsequent agreement.  The High Court held  that\t the
\ngeneral\t plan of section 28 suggested that  the\t Legislature
\ndid not contemplate any third method for extension of  time.
\nSince, in the present case, the arbitration agreement itself
\ndid  not  stipulate for extension of time  by  a  subsequent
\nagreement  and there was no order of a Court  extending\t the
\ntime the award was invalid.\n<\/p>\n
The question depends upon the true construction of  section\n<\/p>\n
28.   There is no doubt that the Arbitrator is\texpected  to
\nmake  Ms  award within four months of his  entering  on\t the
\nreference or on his being called upon to act or within\tsuch
\nextended  time as the Court may allow.\tReading clause 3  of
\nthe Schedule along with section 28 one finds that the  power
\nto  enlarge the time is vested in the Court and not  in\t the
\nArbitrator.  Clause 3 and section 28(1) exclude by necessary
\nimplication the power of the Arbitrator to enlarge the time.
\nThis is emphasised by section 28(2) which provides that even
\nwhen such a provision giving the Arbitrator power to enlarge
\nthe time is contained in the agreement, that provision shall
\nbe void and of no effect.  The
\n262<\/span>
\nheadnote of section 28 brings out the force of this position
\nin  law by providing that the power is of the Court only  to
\nenlarge time for making the award.\n<\/p>\n
Sub-section   2\t of  section  28,  however,  indicates\t one
\nexception  to  the  above rule that  the  Arbitrator  cannot
\nenlarge\t the  time, and that is when the parties  agree,  to
\nsuch  an  enlargement.\tThe occasion for the  Arbitrator  to
\nenlarge\t the  time occurs only after he is  called  upon  to
\nproceed\t  with\tthe  arbitration  or  he  enters  upon\t the
\nreference.  Hence, it is clear that if the, parties agree to
\nthe enlargement of time after the Arbitrator has entered  on
\nthe reference, the Arbitrator has the power to enlarge it in
\naccordance  with  the  mutual agreement or  consent  of\t the
\nparties.   That\t such  a consent must  be  a  Post-reference
\nconsent, is also clear from section 28(2) which renders null
\nand  void  a  provision in the original\t agreement  to\tthat
\neffect.\t  In  a\t sense\twhere a provision  is  made  in\t the
\noriginal agreement that the Arbitrator may enlarge the time,
\nsuch   a  provision  always  implies  mutual   consent\t for
\nenlargement  but such mutual consent initially expressed  in
\nthe  original  agreement does not save\tthe  provision\tfrom
\nbeing  void.   It is, therefore, clear that  the  Arbitrator
\ngets  the  jurisdiction to enlarge the time for\t making\t the
\naward only in a case where after entering on the arbitration
\nthe,  parties to the arbitration agreement consent  to\tsuch
\nenlargement of time.\n<\/p>\n
The  question,\thowever,  is whether  it  was  necessary  to
\nstipulate  in  the  arbitration\t agreement  itself  for\t the
\nenlargement  of\t time  by a  subsequent\t agreement.  in\t our
\nopinion, sub-section 2 of section 28 does not say that\tsuch
\na stipulation should be in the arbitration agreement itself.
\nIt only tells us in which specific case of mutual consent  a
\nprovision for enlargement of the time for making the  award,
\nif  inserted in the agreement, will have the provision\tfrom
\nbeing  null and void.  It does not purport to lay down\tthat
\nsuch a specific case of mutual consent should, in order\t to
\nbecome effective, be part of the original agreement  between
\nthe parties.\n<\/p>\n
The   above  interpretation  is\t in  consonance\t  with\t the
\nfundamental principles of arbitration.\tThe arbitrator\tgets
\nhis  jurisdiction  to make a binding award on  an  agreement
\nbetween\t the  parties  to  refer  a  dispute  to  him.\t The
\nagreement  between  the\t parties is the\t foundation  of\t the
\njurisdiction of the Arbitrator.\t Like any contract by mutual
\nconsent\t of  the parties, the terms of the contract  can  be
\nmodified.  Even in a case where the Arbitrator enters on the
\nreference on an invalid agreement it is open to the  parties
\nto enter into a fresh agreement to refer the dispute to\t the
\nArbitrator  while it is pending adjudication and in such  an
\nevent the proceedings before the Arbitrator can be upheld as
\nreferable  to that agreement and the award will not be\topen
\nto attack as without jurisdiction.  See : Beverly Jule Mills
\nCo. Ltd. v. Raymon & Com. (India) Privdte Ltd.(1) Such being
\nthe power of mutual consent of the parties in the sphere  of
\narbitration  one  does not see why by mutual  agreement\t the
\nparties\t cannot enlarge the time for making the\t award\twhen
\nthe   Arbitrator  has  entered\ton  the\t reference  and\t  is
\nproceeding with the arbitration.\n<\/p>\n
(1)  [1963] 3 S. C. R. 209, 226.\n<\/p>\n
263<\/span><\/p>\n
In our view, therefore, section 28(2) does not provide\tthat
\nthe  Arbitration agreement alone should stipulate  that\t the
\nArbitrator  may\t extend the time on a  subsequent  agreement
\nbetween the parties.  Even in a case where there is no\tsuch
\nstipulation  in\t the original agreement, the  Arbitrator  is
\nentitled  to  enlarge  the time if  after  entering  on\t the
\nreference  the\tparties to the arbitration consent  to\tsuch
\nenlargement.   In the present case, the enlargement of\ttime
\nfor  making the award was on the request and mutual  consent
\nof the parties during arbitration and, therefore, the  award
\nmade within the extended time must be deemed to be valid.
\nThe second ground on which the reference was superseded\t was
\nthat  the arbitration agreement was defective on account  of
\nvagueness  and uncertainty.  We have carefully gone  through
\nthe  arbitration  agreement Ext. 13 dated  5-2-1958  and  we
\nthink that the High Court was in error in thinking that\t the
\nagreement was vague and uncertain.  It will be seen that the
\nagreement is between Hari Krishna Wattal on the one hand and
\nShri  Vaikunth Nath Pandya on the other.  The long  preamble
\nshows that they were doing business in the name of Wattal  &
\nCo.  and  disputes had arisen between them  with  regard  to
\ncertain amounts which were put to the debit of Vaikunth Nath
\nPandya\tand his sons which Wattal insisted must be  paid  to
\nhim.\tBut  Vaikunth  Nath  Pandya  was   challenging\t the
\ncorrectness  of\t the  entries  in  the\taccounts  about\t the
\nbusiness of Wattal & Co. It may be stated here that Vaikunth
\nNath  Pandya had two sons.  One son named Rishi Nath  Pandya
\nwas the Manager of Kailash Carpet Co. a proprietary  concern
\nof Hari Krishna Wattal.\t There were accounts in the name  of
\nRishi  Nath both in Kailash Carpet Co. and Wattal & Co.\t The
\nsecond\tson  Ravinder Nath was doing  business\tas  Ravindra
\nBros.\tHe  had a cash credit account with Wattal &  Co.  It
\nappears\t that  some dispute, was raised with regard  to\t the
\ncorrectness of the accounts in the names of the two sons  in
\nthe books of Wattal & Co. but if the ‘accounts were held  to
\nbe  correct  there was no dispute that the  father  Vaikunth
\nNath  Pandya had agreed to accept the liabilities on  behalf
\nof the sons.  So, the agreement of reference contained these
\nfour clauses :\n<\/p>\n
\t      1.    That the said Arbitrator shall determine
\n\t      what  amounts  if any, are due  to  the  first
\n\t      party (Wattal) from the’ second party (Pandya)
\n\t      and his sons including Ravindra Brothers,\t and
\n\t      how  the\tsame should be paid  by\t the  second
\n\t      party (Pandya).\n<\/p><\/blockquote>\n
\t      2.    That  the  arbitrator  shall  allow\t the
\n\t      second party to check and examine the accounts
\n\t      of  Wattal  and Co. not only from\t 1-5-55\t but
\n\t      also  for\t any  such  earlier  period  as\t the
\n\t      arbitrator thinks fit.\n<\/p><\/blockquote>\n
\t      3.    That the Arbitrator shall be entitled to
\n\t      hear and determine the other grievances of the
\n\t      parties, if any.\n<\/p><\/blockquote>\n
\t      4.    That the Arbitrator shall determine\t the
\n\t      amount payable by one party to the other after
\n\t      taking  into consideration the sums due to  or
\n\t      due by the second party or his sons  including
\n\t      Ravindra\tBrothers from or to the first  party
\n\t      respectively.”<\/p><\/blockquote>\n
\t      L373Sup CI\/74
\n264<\/span>
\nWe  have failed to understand what was vague  and  uncertain
\nabout  the agreement.  It appears from the record  that\t the
\nArbitrator  had called upon Wattal to formulate\t his  claims
\nand  then  replies  on behalf of  Pandya  were\tduly  filed.
\nAccounts  were inspected from time to time by  Pandya,\tfull
\nopportunity being given to him to do so as per the reference
\nagreement  itself.  Arguments were also filed in writing  by
\nboth  the sides.  It does not appear that any complaint\t was
\nmade  on behalf of the parties before the  Arbitrator  about
\nanything  vague or uncertain in the agreement.\tOnce  it  is
\nremembered  that the arbitration was with reference  to\t the
\nbusiness  of  Wattal  & Co. of which the  parties  were\t the
\npartners,  it  is clear that the four  clauses\treferred  to
\nabove  must be read against the background that all of\tthem
\nare in the context of the business of Wattal & Co. The\tmere
\nfact that the Arbitrator had looked into accounts of Kailash
\nCarpet\t&  Co. in order to verify any entries  made  in\t the
\nbooks  of the business of Wattal & Co. would not  mean\tthat
\nsome  how  the\taccounts  of Kailash  Carpet  Co.  would  be
\ninterpolated  into  the books of Wattal &  Co.\tThe  learned
\nJudge agrees that if one looks at the preamble of the agree-
\nment,  that gave the impression that the Arbitrator  had  to
\ndecide\tmerely\tthe  disputes relating to  the\tbusiness  of
\nWattal\t& Co. We must say with respect that this  impression
\nis the correct impression.  We do not see how clauses 1\t and
\n4 enlarged the scope of arbitration proceedings.  There were
\nentries\t in  the books of Wattal & Co. relating to  the\t two
\nsons of Pandya.\t The father had undertaken by the  agreement
\nto  accept the true liabilities of his sons as disclosed  in
\nthe  books  of\tthe  business of Wattal &  Co.\tThat  was  a
\nperfectly  legal  liability  the  father  was  entitled\t  to
\nundertake on behalf of his sons.  The Arbitrator had to deal
\nwith  the  disputes between the two parties in\trelation  to
\nbusiness of Wattal & Co. And, if for deciding the matter  he
\nrequired  verification\tof  the\t entries  in  the  books  of
\naccounts,  we  do  not see why\tthe  Arbitrator\t should\t not
\nexamine\t any  other accounts, even the accounts\t of  Kailash
\nCarpet\tCo.  Nor  can we find any  sufficient  objection  to
\nclause\t3 of the- agreement referred to above.\tThat  clause
\nsays  that  the\t Arbitrator shall be entitled  to  hear\t and
\ndetermine  the other grievances of the parties, if any.\t  It
\nmay  be that the wording of the clause is rather loose,\t but
\nonce you remember that there are disputes with regard to the
\nbusiness  of Wattal & CO. that clause must be understood  in
\nthat  context.\t The  ‘grievances’ mean\t nothing  more\tthan
\ndisputes.  Two specific disputes were mentioned in clauses 1
\nand  2, clause 3 made provision for any other dispute  which
\nmay legitimately arise on an examination of the accounts  of
\nthe  business.\t In other words, all  disputes\tbetween\t the
\nparties\t relating  to  the debits and  the  credits  in\t the
\naccounts  of the business of Wattal & Co. were the  subject-
\nmatter of the arbitration.  We do not agree with the learned
\nJudge  that it was possible to bring in any dispute  of\t the
\nparties within the scope of the arbitration proceedings.  We
\ndo  not,  therefore,  think that the agreement\twas  bad  on
\naccount of vagueness or uncertainty.’
\nThe  two  grounds  on which the High  Court  superseded\t the
\nreference  had not been substantiated.\tThe award cannot  be
\nchallenged  either on the ground that it was made after\t the
\nprescribed period or
\n265<\/span>
\nthat the agreement for arbitration was defective on  account
\nof  vagueness  and  uncertainty.   Since  the  other  points
\narising\t in  the appeal before the High Court had  not\tbeen
\ndealt with, the case will have to go back to the High  Court
\nto  be disposed of in accordance with law after hearing\t the
\nparties\t on points not agitated before the High Court.\t The
\nappellant  shall get his costs from the respondents in\tthis
\nappeal.\n<\/p>\n
V.P.S.\n<\/p>\n
2 66<\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Hari Krishan Wattal vs Vaikunth Nath Pandya on 18 July, 1973 Equivalent citations: 1973 AIR 2479, 1974 SCR (1) 259 Author: D Palekar Bench: Palekar, D.G. PETITIONER: HARI KRISHAN WATTAL Vs. RESPONDENT: VAIKUNTH NATH PANDYA DATE OF JUDGMENT18\/07\/1973 BENCH: PALEKAR, D.G. BENCH: PALEKAR, D.G. ALAGIRISWAMI, A. CITATION: 1973 AIR 2479 1974 […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-207707","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nHari Krishan Wattal vs Vaikunth Nath Pandya on 18 July, 1973 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/hari-krishan-wattal-vs-vaikunth-nath-pandya-on-18-july-1973\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Hari Krishan Wattal vs Vaikunth Nath Pandya on 18 July, 1973 - 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