Case No: Civil Revision No. 2609 of 1999
Court: High Court Division,,
Citation: 54 DLR (2002) 138
Case Year: 2002
Appellant: Mohsina Rahman alias Jaya
Respondent: Abdul Majid and others
Delivery Date: 2001-06-24
High Court Division
(Civil Revisional Jurisdiction)
Mohammad Fazlul Haque, J.
NK Chakravartty, J.
Mohsina Rahman alias Jaya
Abdul Majid and others
June 24, 2001.
Arbitration Act (X of 1940)
Sections 32 & 33
A suit to challenge existence of an Arbitration agreement or an award is not maintainable by reason of section 32 which provides that such a challenge must be made by means of an application and not by means of a suit.
Bakhtiar Hossain, Advocate — For the Petitioner.
MA Samad with Bazlul Kasir and MGH Ruhullah, Advocates — For the Opposite Parties.
Civil Revision No. 2609 of 1999.
NK Chakravartty J.
1. This Rule at the instance of the defendant/petitioner was issued calling upon the opposite parties to show cause as to why the impugned order dated 16-5-99 passed by the Subordinate Judge, 5th Court, Dhaka in Title Suit No.164 of 1998 complained in the petition moved in Court should not be set aside.
2. The facts relevant for the purpose of disposal of this Rule are, that the opposite-parties as plaintiffs has filed Title Suit No.164 of 1998 in the Court of Subordinate Judge, 5th Court, Dhaka with a prayer to make the award of Taka 24, 00,000 (Twenty-four lac) as passed and signed on 30-5-1998 by the Arbitrator for Rule of Court against the petitioner.
3. The plaintiffs-opposite parties were the lessees of shops No. 1, 5, 9, 11 and 12 situated on the ground floor of the Meherun Nessa AC Market at 164 Elephant Road, Dhaka under the defendant petitioner by paying salami of Taka 6,95,000 (six lac ninety-five thousand) to the defendant-petitioner and the lease commenced from 1987. They also paid monthly rent regularly. They were given the right to transfer possession on payment of transfer fee of Taka 10,000 (ten thousand) to the defendant- petitioner. After taking the lease the plaintiffs-opposite parties invested several lakh takas for decoration of the shops and also for purchasing the materials for running their business in the aforesaid shops.
4. But all on a sudden defendant-petitioner served a notice on 16-7-95 upon the plaintiff-opposite parties asking to vacate the shops without determining the lease as per section 106 of the TP Act, and at the same time also forcibly started demolition of the building from the 5th floor of the building. In the circumstance, the plaintiffs-opposite parties filed Title Suit No. 98 of 1995 in the 3rd Court of Sub-Judge, Dhaka on 16-6-95 seeking a declaration of their lease-hold rights in the disputed shops, and that the defendant-petitioner had no right to evict them from their shops except through due process of law. The plaintiffs-opposite parties also filed an application under Order XXXIX rules 1 and 2 of the Code of Civil Procedure for restraining the defendant-petitioner from interfering with the peaceful possession and running of business of the plaintiffs-opposite parties. The defendant-petitioner by appearing in the suit filed an application for rejection of plaint under Order VII rule 11 of the Code of Civil Procedure on the ground that without reference to arbitration in terms of the Arbitration clause of the lease agreement, the suit is not maintainable. The learned Subordinate Judge rejected the plaint without hearing the injunction matter as there is an Arbitration clause in the agreement.
5. The plaintiffs-opposite parties then preferred FA No. 300 of 1995 in the High Court Division and also filed an application for injunction and obtained an order of ad-interim injunction dated 13-9-95 and thereafter the High Court Division heard the application for injunction but ultimately, discharged the Rule on 14-12-95 with observation that even if the plaintiffs-appellants would make out a prima facie case in their favour but the balance of convenience and inconvenience was in favour of the defendant.
6. Being aggrieved by the said order of the Hon’ble High Court an appeal was filed before the Appellate Division of the Supreme Court only on the ground of the jurisdiction. Their Lordships of the Appellate Division of the Supreme Court without entering into the merit of the case passed judgment and order in CPLA No.6 of 1996 with the observation that the defendant-petitioner is willing to return the amount of salami received by her and also agreeable to decide the question of further claims of the plaintiffs-opposite parties along with compensation by way of Arbitration as contemplated in the lease of agreement and accordingly, refused to grant injunction and dismissed the CPLA No..6 of 1996 on 10-1-96 for enabling the parties to settle the matter through arbitration. Then the plaintiffs-opposite parties requested the defendant-petitioner to appoint a sole Arbitrator but he refused to do so. Then the plaintiffs-opposite parties filed Arbitration Miscellaneous Case No. 16 of 1996 in the 5th Court of Subordinate Judge, Dhaka under section 8 of the Arbitration Act, 1940 for appointment of sole Arbitrator by the court. The defendant-petitioner appeared and took several adjournments just to delay the disposal of the case. The learned Sub ordinate Judge after hearing both the parties and by judgment and order dated 28-4-97 appointed Mr. Justice Abdul Bari Sarker, a retired judge of the High Court Division as the sole Arbitrator to arbitrate in the matter. Then the Arbitrator started arbitration proceedings on 9-6-1997 and also issued notice upon the parties. The learned Arbitrator also directed the plaintiffs-opposite parties to file their statements of claim by 9-7-1997 who filed statement of claim on 10-7-97 but the defendant- petitioner with an ill motive refused to accept the copy of the statement of the claim and began to take adjournments repeatedly. The defendant-petitioner again on the date of hearing filed another adjournment petition which was also strongly opposed by the plaintiffs-opposite party and the Arbitrator rejected the petition and directed the advocate of the defendant-petitioner to get ready for hearing but the defendant-petitioner again filed an application for adjournment on the ground that she would be filing petition before the court for changing the Arbitrator. The learned Arbitrator considering the said petition allowed time up to 23-5-98 for bringing stay order but the defendant-petitioner having failed to obtain any stay order from the court appeared before the Arbitrator on 23-5-98 and again filed an adjournment petition which was rejected and, as such, being aggrieved defendant-petitioner left the court and did not contest the, proceeding. The Arbitrator finding no any other way heard the plaintiffs-opposite parties and considering the statement of claim and written objection of the defendant-petitioner and evidences on record passed award on 30-5-98 only for Taka 24,00,000 (Twenty-four lac) in favour of the plaintiffs-opposite parties as against their claim for 2,36,13,975. The defendant-petitioner then filed Title Suit No.54 of 1998 in the 3rd Court of Subordinate Judge, Dhaka and the plaintiffs opposite parties filed an application under Order VII rule 11 of the Code of Civil Procedure which was transferred to the court of Sub-Judge and Artha Rin Adalat No.3 and was renumbered as Title Suit No.5 of 1999 and on hearing the said application the learned Court rejected the plaint of the Title Suit No.5 of 1998.
7. The plaintiff-opposite parties made their claim of Taka 20, 45,000 (Twenty lac forty-five thousand) with compensation at the rate of 18% on the said amount in the year 1995 but the defendant petitioner did not accept or satisfy the claim. Now the defendant petitioner is trying to confine the claim of plaintiffs-opposite parties in the said amount which was their investment in the shops by way of Salami, decoration and other expenses during the year 1987 to 1990 and compensation on the said amount to be added which has been calculated and shown in the statement of claim filed before the Arbitrator. If the defendant-petitioner would have satisfied plaintiffs-opposite parties in the then claim in the year 1995 with compensation and they would have kept the same in fixed deposit in a bank then now the said amount would have been almost double. Alternatively, in the year 1995 with that money the plaintiffs-opposite-parties could get possession of suitable shops in similar place, but now in order to get possession of shops in similar places the plaintiffs-opposite parties will be required to pay 3/4 times of the said amount. Considering the above position and the claim of the plaintiffs-opposite parties Arbitrator has awarded nothing to the plaintiffs-opposite parties. The claim of the plaintiffs opposite parties should not exceed Taka 12, 90,000 for settlement through the Arbitration is not correct. There was no reason to file any suit in the declamatory form stating, inter alia, that the impugned award of Taka 24, 00,000 is collusive and not binding upon the petitioner. Plaintiffs-opposite parties have filed Title Suit No.164 of 1998 before the court for making the award the Rule of the Court as the defendant petitioner refused to pay the awarded sum to the plaintiffs-opposite party. As per Arbitration Act, 1940 an award can be challenged under section 33 of the Act only on the grounds as contemplated in section 30 of the said Act and only by deposit of the amount in court which she is required to pay under the award or by furnishing security to the satisfaction of the court and in view of the provision laid down in the Arbitration Act the Title Suit No.142 of 1998 is not maintainable. Even then the defendant-petitioner has not deposited the awarded sum in the court. Plaintiffs-opposite parties as per provision of Arbitration Act filed a petition praying for direction on the defendant petitioner to deposit awarded sum in court. But she did not. The defendant-petitioner with ill motive filed a petition and prayed for stay of the proceeding of the said Title Suit No.164 of 1998 on the ground that Miscellaneous Case No. 34 of 1998 is pending but the court rejected the petition for stay dated 16-5-99. In this context it has been that there was meeting with the shop-keepers for keeping the shops open and the matter was verbally discussed but there was no such meeting regarding return of Salami with compensation. Practically the petitioner is not entitled to raise any objection against the impugned Award without compliance of the amended section 33 of the Arbitration Act 1940 which is mandatory in nature but the petitioner has filed the Title Suit No.142 of 1998 under section 42 of the Specific Relief Act, which is also not maintainable under the law and so the Miscellaneous Case 34 of 1998 has become infructuous when the Arbitrator passed his Award on 30-5-1998. The Title Suit No.142 of 1998 filed by the petitioner is also not maintainable as per provision of law and, as such, the plaintiffs-opposite party has filed the application under Order VII rule 11 of the Code of Civil Procedure for rejection of the plaint.
8. According to the plaintiffs-opposite parties, the suit filed by the defendant-petitioner and the suit filed by the plaintiff-parties are not on same subject matter and the issues of all these suits are also not the same and, as such, no miscarriage of justice has been committed.
9. On the contrary, the case of the defendant-petitioner, in brief, is that the petitioner after receipt of the show cause notice from the Court of 5th Subordinate Judge, Dhaka as to why the Award should not be made a Rule of Court, filed appearance by executing vokalatnama and also filed necessary written objection in reply to the show cause notice stating, inter alia, the grounds for not making the impugned Award as Rule of the Court and on the date of hearing on 5-1-99 the petitioner was compelled to file petition before the Subordinate Judge, 5th Court, Dhaka to stay all further proceedings of the Title Suit No.164 of 1998 till the disposal of the earlier case and the suit being Miscellaneous Case No. 34 of 1998 under section 5 of the Arbitration Act, 1940 and Title Suit No.142 of 1998 under section 42 of the Specific Relief Act, but the Court below rejected the petition by the impugned order dated 16-5-99 and fixed up next date on 6-6-99 for hearing without applying its judicial mind and thereby caused errors of law resulting in error in the decision occasioning failure of justice.
10. That the parties were the tenants under the petitioner by purchase of possession of shop room situated at 164, Elephant Road under the name and style Meherun Nessa AC Market but the market could not flourish for which the petitioner as owner decided to demolish the market and to raise residential multistoried flat building and all the tenants were called for and after several meetings their Salami money with some compensation were returned by the petitioner but these opposite party though agreed in the meeting filed Title Suit No. 98 of 1995 in the Court of Subordinate Judge, 3rd Court, Dhaka praying for decree for declaration as lawful tenants in possession of the shops which was rejected on 29-7-95 by the court on the hearing of an application under Order VII rule 11 of the Civil Procedure Code filed by the petitioner as defendant in that suit and thus the opposite party preferred FA No.300 of 1995 before the Honorable High Court Division which was also rejected for which the petitioner filed leave petition for leave to appeal being No.6 of 1996 expressing their final claim to the extent of Taka 20,45,000 but the petitioner refused to pay the same agreeing to settle the said claim through Arbitration as there is Arbitration clause in the Lease Deed for which the Hon’ble Appellate Division found no illegality in the order passed by the High Court Division and the leave petition of the opposite party was dismissed by the Appellate Division. The Hon’ble Appellate Division also expressed in the Judgment that “Further it also appears that the tenants are willing to vacate the premises if they are given a sum of Taka 20, 45,000. Hence, the real dispute is now about the quantum of payment of money to the petitioners. That the earlier suit and case between the same set of parties over the same subject matter should be disposed of first than the later suit as per well settled principles of law, but the learned court below by not doing so caused miscarriage of justice resulting in errors in the decision occasioning failure of justice.
11. Being highly aggrieved at and dissatisfied with the order dated 16-5-99 passed by the Subordinate Judge, 5th Court, Dhaka in Title Suit No.164 of 1998, the defendant petitioner begs to prefer this Revisional Application before this Court.
12. Mr. Bakhtiar Hossain, learned Advocate appeared on behalf of the petitioner, Mr. MA Samad, Bar-at-Law learned Advocate, appeared on behalf of the opposite-parties with Mr. Bazlul Kaisar and Mr. MGH Ruhullah, learned Advocates.
13. Mr. Bakhtiar Hossain submits that the learned Subordinate Judge has committed an error of law in rejecting the petition dated 5-1-99 considering that since the Arbitrator passed, signed and submitted that Award, the object of the Miscellaneous Case No.54 of 1998 and the Title Suit No.142 of 1998 has become infructuous and thus the impugned order indirectly disposed the earlier case and the suit as dismissed without hearing from any parties. He has further submitted that the learned court below committed error of law in rejecting the petition dated 5-1-1999 for disposal of the earlier case which was filed under section 5 of the Arbitration Act, 1940 and pending in the said Court for disposal since long.
According to him, the learned court below committed error of law in rejecting the petition while the declaratory suit being Title Suit No.142 of 1998 filed by the petitioner as plaintiff well in earlier for a decree that impugned Award of Taka 24, 00,000 (Twenty-four lac) is to be declared as illegal, collusive, and the same is not binding upon the plaintiff (petitioner of this Revisional Application).
iv) He has also argued that the learned court below erred in law in rejecting the petition inasmuch as the petitioner having lost confidence upon the Arbitrator filed the Miscellaneous case under section 5 of the Arbitration Act, 1940 and the fact of filing the Miscellaneous case was informed by the way of petitioner praying adjournment on the next date of hearing of the Arbitration case on 23-5-98 but the learned Arbitrator rejected the petition, took up the proceedings for ex parte hearing and ultimately, on 30-5-98 passed and signed the Award for Taka 24,00,000 which could never be binding upon the petitioner as the Miscellaneous cases was filed well before passing and signing the impugned Award and the Title Suit in the declaratory form which deserved disposal prior to the subsequent suit for making the impugned Award as Rule of Court.
Mr. Bakhtear Hossain further submits that Court below committed error of law in rejecting the petition inasmuch as the same would cause unnecessary harassment and financial hardship to the petitioner and hence the error has resulted in, error in the decision occasioning failure of justice.
According to him, the Court below has committed error of law contending that the petitioner would be able to raise objection for setting aside the Award is not materially correct without deposit of the security money as mandatory requirement of amended clause of section 33 of the Arbitration Act, 1940.
In fine, he has argued that the Court below erred in law to apply its judicial mind for making distinction between the effects of Miscellaneous case No. 34 of 1998 and the Title Suit No.164 of 1998 while the Miscellaneous case, if allowed, the question of impugned award which is filed under Title Suit No.164 of 1998 for making Rule of Court will be buried in the mud and the question of raising objection for setting aside the same will not be needed and hence the error has resulted an error in the decision occasioning failure of justice.
14. On the other hand, Mr. MA Samad submits that as per provision of section 33 of the Arbitration Act, the petitioner of this revisional application had not deposited any security to the satisfaction of the Court for the payment of sum awarded by the Arbitrator and, as such, the petition filed by the opposite party No.1 making the award the Rule of the Court is lawful in the eye of law.
He has further submitted that according to Article 158 of the Limitation Act, 1908 an application to set aside an award or to get an award remitted for reconsideration is to be filed within 30 days from the date of service of notice of the award but in the instant case, the petitioner of this revisional application had appeared long after the expiry of 30 days and hence the petition filed by the opposite party No.1 before the Court of Subordinate Judge, 5th Court is a fit case for making the award the Rule of the Court.
Mr. Samad also submits that it is the settled principle of law as stated in AIR 1963 Orissa 17 and AIR 1953 M 561 that limitation application under Article 158 to an application made under section 33 of the Arbitration Act challenging the validity of an award can not be served even under section 5 of the Limitation Act as that section has no application to such a case and, as such, the award filed by the opposite party No.1 is legal for making it Rule of the Court. In fine, Mr. Samad has also referred a Ruling reported in 52 DLR (AD) 97 wherein it was held by their learned Lordships that,
“a suit to challenge the existence of an Arbitration agreement or an award is not maintainable by reason of section 33 which provides that such a challenge must be made by means of an application and not by means of a suit.”
15. Facts are numerous but decision lies in a nutshell. The only point to be decided is whether the learned Subordinate Judge was justified in passing the impugned judgment and order.
16. In the instant case, the defendant petitioner practically challenged the award of the court by filing a suit. The suit was an independent suit sought for a declaration that the award made by the Arbitration and the order making the award a Rule of the Court is illegal and void.
17. Section 32 of the Act provides that no suit shall lie on any ground for a declaration upon the validity of the Arbitration award nor such award can be set aside “otherwise than as provided in the act”. The remedy by a suit is taken away by section 32 of the Act. The expression, “Otherwise than as provided in this Act” used in section 32 brings provision of section 33. Under section 33 of the Act any party to a Arbitration agreement can challenge the existence or validity of such agreement or an award or to have the effect of either determined upon an application to the court. A suit to challenge existence of an Arbitration agreement or an award is not maintainable by reason of section 32 which provides that such a challenge must be made by means of an application and not by means of a suit.
18. Thus from a reading of sections 32 and 33 of the Act it seems to us that without having the recourse to section 33 no declaration that an Arbitration agreement or an award or the effect of either for an existence or validity cannot be obtained in a suit like the present and such remedy can be had by filing an application under section 33.
19. Having regard to the facts, circumstances, materials on record and argument advanced by the learned Advocate of both sides we are of the view that no suit for declaration that arbitration award was void can be filed without recourse to section 33 of the Act and section 32 bars a suit of the present nature. Admittedly, Title suit No.5 of 1998, 142 of 1998 plaints were rejected under Order VII rule II and so also Arbitration Miscellaneous case No. 34 of 1998 was also dismissed for default. We, therefore, find no merit in the case of Mr. Bakhtiar Hossain. He has also failed to point out any legal infirmity in the decision of the learned trial Court.
20. In the result, the Rule is discharged without any order as to costs. The impugned judgment and order dated 16-5-99 passed by the Subordinate Judge, 5th Court, Dhaka in Title Suit No. 164 of 1998 rejecting the petition dated 5-1-99 for stay of further proceedings of the suit till disposal of the Miscellaneous Case No. 34 of 1998 and Title suit No. 142 of 1998 are affirmed.
Stay granted earlier by this Court is hereby vacated.