Case Note & Summary
The dispute arose among the heirs of Hemendra Nath Sen, who died intestate in 1929 leaving his widow Premtarangini Debi and eight sons. The parties were governed by the Dayabhaga School of Hindu law. Hemendra Nath left considerable properties, and after his death disputes arose between his heirs. An agreement dated January 31, 1933 settled these disputes, providing for partition of properties among nine parties with equal shares, subject to certain provisions regarding a glass factory. The second appellant was to have a 5 annas share in the glass factory, while the rest divided the balance of the 11 annas share. Fresh disputes arose, and by a formal agreement dated May 11, 1953, the parties set out those disputes and agreed to refer them to the sole arbitration of Dr. Radha Binode Pal, an eminent lawyer. The reference covered all disputes arising out of or in connection with the New Indian Glass Works Ltd., including management, alleged leases, and all disputes relating to joint properties. Before the reference was submitted to the arbitrator, the respondents filed an application under Section 20 of the Arbitration Act, 1940 in the Calcutta High Court on July 12, 1954, seeking an order directing the agreement to be filed and a reference to the arbitrator. The High Court made an order on November 29, 1954 referring the disputes to the arbitrator. The arbitrator entered the reference on January 16, 1955, received statements of cases, took evidence, heard counsel, and pronounced his award on May 27, 1955. The award was filed in court on June 29, 1955. The appellants applied to set aside the award on various grounds, principally that it was incomplete because all disputes referred had not been disposed of. The Single Judge of the Calcutta High Court dismissed the application on May 26, 1956 and directed a decree in terms of the award. The appellants filed two appeals, which were dismissed by a Division Bench on January 29, 1957. The appellants then obtained special leave to appeal to the Supreme Court. The main contention raised before the Supreme Court was that the award was incomplete in three respects: first, it gave no direction regarding rendition of accounts and profits with reference to a lease of the Glass Works Ltd. which the award had declared invalid; second, it failed to comply with the request in the arbitration agreement to give directions as regards future management of the Glass Company; and third, it did not specify whether the allegation of misappropriation of moneys by the sixth respondent was made out and gave no direction on that matter. The Supreme Court held that a court should approach an award with a desire to support it if reasonably possible, rather than destroy it. Unless the reference specifically requires, the arbitrator is not bound to deal with each claim separately but can deliver a consolidated award. The silence of the arbitrator upon a subject placed before him means that the arbitrator has negatived such plea. Where an award is made de praemissis, the presumption is that the arbitrator intended to dispose finally of all matters in difference. Since the award expressly stated it was made de praemissis, it was presumed complete. The silence on the claim for accounting was taken as a decision rejecting that claim. The absence of any provision regarding future management of the company did not leave a lacuna; the parties were left to the general law. The absence of any provision regarding the misappropriation claim was capable of only one interpretation: the arbitrator rejected the claims. Accordingly, the Supreme Court dismissed the appeal and upheld the arbitration award, holding that it was valid and not liable to be set aside under Section 30 of the Arbitration Act, 1940.
Headnote
A) Arbitration - Finality of Award - Presumption of Completeness - Arbitration Act, 1940, Section 30 - Court should support an award if reasonably possible and not set aside unless incomplete or invalid. The award expressly stated it was made de praemissis, i.e., of and concerning all matters in dispute, raising a presumption that it disposed of all matters. Silence on the claim for accounts and profits from the invalid lease meant rejection of that claim, and the award was not incomplete. Held that the award is valid and not liable to be set aside. (Paras Not mentioned) B) Arbitration - Unreasoned Award - Silence on Pleas - Arbitration Act, 1940, Section 30 - Arbitrator is not bound to give reasons or deal with each claim separately; a consolidated award is permissible. Unless the reference specifically requires, silence on a matter implies rejection of the plea. Absence of specific direction on future management of the glass company did not leave a lacuna; parties were left to the general law applicable to company management. Held that the award is complete. (Paras Not mentioned) C) Arbitration - Scope of Reference - Incomplete Award Challenge - Arbitration Act, 1940, Section 30 - Allegations of misappropriation referred to the arbitrator, but the award did not specifically mention them; the absence of any provision was capable of only one interpretation: the arbitrator rejected the claims. The award was complete and valid. Held that the award cannot be set aside on grounds of incompleteness. (Paras Not mentioned) D) Arbitration - Validity of Award - De Praemissis Presumption - Arbitration Act, 1940, Section 30 - Where an award is made de praemissis, it is presumed final and disposes of all matters in difference. The court referred to English cases including Salby v. Whitbread, Re Brown and Croydon Canal Co., Jewell v. Christe, and Harrison v. Creswick. Held that the award was not liable to be set aside. (Paras Not mentioned)
Issue of Consideration
Whether the arbitration award was incomplete and liable to be set aside under Section 30 of the Arbitration Act, 1940 because it did not dispose of all disputes referred, including rendition of accounts and profits from invalid lease, directions for future management of glass company, and allegation of misappropriation by sixth respondent.
Final Decision
The Supreme Court dismissed the appeal and upheld the arbitration award, holding that the award was complete and valid. The silence on the three matters constituted rejection of the claims, and the award was not liable to be set aside under Section 30 of the Arbitration Act, 1940.
Law Points
- A court should approach an award with a desire to support it if reasonably possible
- rather than destroy it
- arbitrator is not bound to deal with each claim separately unless the reference specifically requires
- silence of arbitrator on a plea placed before him means rejection
- an award made de praemissis is presumed final and disposes of all matters in difference
- absence of specific directions for future management leaves parties to general law
