P L D 1960 (W (PLP)

KAIKAUS, J.‑

This is a Letters Patent Appeal against the order of a learned Single Judge of this Court affirming on appeal, the order of the Civil Judge 1st Class, Lahore, refusing to set aside an award.

2. The facts relating to the appeal are that Sheikh Mumtaz Ahmad respondent filed on the 1st of April 1948, a suit against Sheikh Mahbub Alam appellant for dissolution of partnership and rendition of accounts alleging that the parties had become partners to the extent of half and half for the purpose of exporting twenty wagons of salt to India and the respondent had paid to the appellant Rs. 30,000 as his share of the capital. It was further alleged that it was the respondent who was to manage the business and to keep accounts. Parties agreed to refer the matter involved in the suit to arbitration and one Mr. Dilawar Husain was appointed an arbitrator but the arbitration was superseded. Sub sequently the dispute was referred to the arbitration of Mr. Ayub Ahmad Makhdoomi, Advocate, who delivered his award on the 13th of December 1954. By this award the arbitrator found the respondent entitled to a sum of Rs. 8,

000. This sum was made up of Rs. 6,000 capital, Rs. 1,850 interest at the rate of 5 per cent. per annum and Rs. 150 costs from 1st of December 1948, to 31st of January 1955. The arbitrator directed payment by instalments and in case of default 3 per cent, per annum interest on the amount remaining unpaid till realisation. This award was filed in the Court, which had made the reference, on the 13th of December 1954. The Civil Judge, who was trying the suit, was not a first class Civil Judge and, finding that be could not pass a decree in terms of the award, he sent the case to the District Judge in order that it may be transferred to a Court having jurisdiction, but before he sent the case to the District Judge he served a notice of the filing of the award on counsel for both the parties and obtained their signatures. The District Judge sent it to the com petent Court on the 22nd of December 1954, directing the parties to appear before that Court (Civil Judge 1st Class) on the 3rd of January 1955. Objections to the award were in fact filed by the appellant on the 3rd of January 1955, but were dismissed for default of appearance on the 10th of March 1955.

3. The points urged by learned counsel for the appellant are the following :‑ (i) There was no service of notice of the making of the award by the arbitrator on the appellant as required by section 14 (1) of the Arbitration Act. (ii) There was no notice of the filing of the award by a com petent Court as required by section 14 (2). (iii) The interest granted by the award was not based on any material on the record and at the same time the arbitrator has no jurisdiction to award interest. Before proceeding to discuss the point raised by learned counsel for the appellant we have to dispose of the preliminary objection raised by learned counsel for the respondent as to the competency of the appeal. It is urged by learned counsel for the respondent that section 39 (2) of the Arbitration Act is a bar to this Letters Patent Appeal. Section 39 runs :‑ "39.

(1) An appeal shall lie from the following orders passed under this Act (and from no others) to the Court authorised by law to bear appeals from original decrees of the Court passing the order :‑ An order‑-- (i) superseding an arbitration ; (ii) on an award stated in the form of a special case ; (iii) modifying or correcting an award ; (iv) filing or refusing to file an arbitration agreement ; (v) staying or refusing to stay legal proceedings where there is an arbitration agreement ; (vi) setting aside or refusing to set aside an award ; proivded that the provisions of this section shall not apply to any order passed by a Small Cause Court. (2) No second appeal shall lie from an order pass4 in appeal under this section but nothing in this section shall affect or tab; away any right to appeal to His Majesty in Council," The question for consideration is whether the provision in section 39 that no second appeal shall lie from an order passed in appeal will prevent the filing of an appeal under Clause 10 of the Letters Patent Act.

4. This matter came up for decision before a Bench of the Lahore High Court in 1948, in Hanuman Chamber of Commerce Ltd. Delhi v Jassa Ram‑Hira Nand (A I R 1948 Lah. 64). The learned Judges were of the opinion that the words "second appeal in section 39 (2) cannot have reference to appeals which arise within this Court and which are very commonly described as "inter‑Court appeals". The question again came up for decision before another Bench of this Court in Sheik Muzaffar Din v. Mst. Allah Wasai and others (P L R 1953 Lah. 529=P L D 1953 Lah. 284). In this judgment there was a full discussion on the point involved. The learned Judges referred to Harraish Chander Chowdhry v. Kali Sundari Debia (I L R 9 Cal. 482), where their Lordships of the Privy Council had refused to interpret section 588 of the Civil Procedure Code of 1877 as preventing an appeal under the Letters Patent. Section 588 was equivalent to section 104 of the Civil Procedure Code of 1908. It provided that no appeal would lie against an order passed in appeal against an order. In rejecting the con tention that this would have the effect of preventing an appeal under the Letters Patent their Lordships said:‑-- "It only remains to observe that their Lordships do not think that section 588 of Act X of 1877, which has the effect of restricting certain appeals, applies to such a case as this, where the appeal is from one of the Judges of the Court to the full Court." In 1908 this section was amended by inserting in it the words "save as otherwise expressly provided in the body of this Code or by any law for the time being in force". But on the date on which their Lordships delivered judgment, that is, in 1877 no such excep tion existed. The reason of their Lordships' decision was that the intention could not be to refer to an appeal from the decision of one Judge of the High Court to the full Court. It will be observed that on principle there does not seem to be any distinction between section 39 of the Arbitration Act and section 588 of the Civil Procedure Code of 1877. There are three cases, however, where a contrary view was taken. They are R. Wright and Partner Ltd. v. Governor‑General in Council (52 C W N 324), Perugonda Radha Krishnamurty v. V. A. Y. Ethirjulu Chetty & Co. and another (A I R 1945 Mad. 184) and Madhavdas Devidas and others v. Vitheldas Vasudeodas and others (A I R 1952 Bom. 229). In these cases the Privy Council judgment was dis tinguished on the ground that in relation to the Civil Procedure Code the Letters Patent was a special law, whereas in relation to arbitration proceedings it was the Arbitration Act which was a special law and, therefore, while the Letters Patent would apply to the exclusion of the Civil Procedure Code, the Arbitration Act would apply to the exclusion of the Letters Patent.

5. In view of the full discussion in Sheikh Muzafar Din v. Mst. Allah Wasai and others, with which we are in agreement it is not necessary to state in detail our reasons for overruling the preliminary objection. The main reason for the view that we take is that it could not be the intention of section 39 (2), Arbitration Act, when it referred to the order passed in appeal, to include an appeal under the Letters Patent. An appeal under the Letters Patent, if it is to be termed as appeal, is an appeal of a special kind. If we refer to the definition of appeal in any law dictionary, we will find that it is a determination by a superior Tribunal as to the correctness of the decision of an inferior Tribunal. In a Letters Patent Appeal, however, there is no superior or inferior Tribunal. When the single Judge decides the case it is decided by the High Court and when the Letters Patent Bench decides the case, it is still decided by the High Court. Perhaps it will be correct to say that there is a full and final decision by the High Court on an appeal only after a Letters Patent Appeal has been heard and decided by the Letters Patent Bench. Till the Letters Patent Bench gives its decision it may be said that the matter has not as yet been finally adjudicated upon by the High Court. When section 39 (2) refers to appeals, it refers only to appeals of an ordinary kind. We may mention here that there is a Full Bench case of the Punjab High Court also in favour of the view that a Letters Patent Appeal will lie in such cases, i.e., Mohindra Supply Co. v. Governor‑General in Council (A I R 19154 Pb. 211).

6. Coming now to the merits of this appeal, we will take up the objections under subsections (1) and (2) of section 14 together. Section 14 (1) provides for a notice of the making of the award by the arbitrators. Section 14 (2) provides that after the award is filed by the arbitrators the Court shall give notice to the parties of the filing of the award. Learned counsel for the appellant con tends that in view of the use of the word "shall" in either of these two provisions, it is necessary to comply with them, and in the absence of notice of the making of the award, or of the filing of the award, the award is as yet unenforceable and void. We see little force in these contentions when urged by a person who, after coming to know of the contents of the award, had filed objections to the award. The object of the provision relating to notice of the making of the award is only to inform the parties that the award has been made so that they may file an application for the filing of the award. Such an application has to be filed within ninety days of the service of notice of the making of the award E under Article 178 of the Limitation Act. Similarly, the object of giving notice of the filing of the award is to enable the parties to file an application for the setting aside of the award. Such an application has under Article 158 to be filed within thirty days of the service of the notice of the award: Had there been involve any question 'of limitation as to an application for filing of the award, or as to an application for setting aside of the award, reliance‑ upon the provisions to give notice would have been justified. But, in the present case, there was no application for filing the award at all and there was no objection on the ground of limitation to the application for setting aside of the award. No objection as to the absence of notice of the making of the award or of filing of the award can be taken by a party who has filed an application for setting aside of the award and the application has been entertained without any objection as to limitation. It is not contended that the appellant did not know of the contents of the award for he had filed objections after going through the award. Learned counsel for the appellant has relied upon judgments which lay down that the provisions of section 14 (1) and (2) are mandatory. They may be mandatory and may form a strong basis for repelling any objections on the ground of limitation, but they cannot render an award void. Their effect would be that the Court would direct compliance with them but when the object of the provisions has been served and the t parties have knowledge of the contents of the award as well as of its filing there is no need of any formal notice (though its absence may be pleaded in reply to an objection on the ground of limitation). Learned counsel for the appellant urges that as long as there is no notice for filing of the award objections cannot be filed at all. We asked him to refer us to any provision to that effect in the Arbitration Act and he was unable to do so. An application for setting aside the award can no doubt be filed within thirty days of the service of notice of filing 'of the award, but there is no reason to suppose that even if notice has not yet been formally served, a party cannot put in an application for setting aside the award. Suppose in the present case this application for setting aside the award had succeeded. Could the respondent urge in the High Court that as notice of the award had not yet been served on the appellant, the whole proceedings were infructuous? He could not possibly be allowed to urge that. It is only the person on whom notice had not been served, who could make a grievance of it and he too could rely on it only in reply x to a plea of limitation. We are at the same time of the opinion that the point under discussion can be decided even by reference to section 17 of the Arbitration Act, which runs:‑-- "

17. Where the Court sees no cause to remit the award or any of the matters referred to arbitration for reconsideration or to set aside the award, the Court shall, after the time for making an application to set aside the award has expired, or such application having been made, after refusing it, proceed to pronounce judgment according to the award, and upon the judgment so pronounced a decree shall follow, and no appeal shall lie from such decree except on the ground that it is in excess of, or not otherwise in accordance with, the award." In accordance with this section either the limitation for filing an application to set aside the award should have expired or such an application should have been made and rejected, and if it is rejected the Court has to proceed to deliver judgment in accordance with L the award. This section does not say that as long as notice of filing of the award has not been served, the Court is not to deliver judgment.

7. We will now take up the question of the legality of the award in so far as it relates to payment of interest. It may be explained that there are two parts of the interest awarded by the arbitrator. The first part relates to interest which is included in the total amount awarded by the arbitrator and the second to the interest for which the respondent was liable in case he did not pay the amount awarded as directed. The first part of the interest consists really of profits which have been calculated on the basis of interest for want of any better basis. The arbitrator found that it was the appellant who was responsible for the maintenance of accounts. He found further that the appellant had not been keeping regular accounts and that the accounts which he actually produced were not true. The respondent was entitled to half of the profits which may have been made. The arbitrator found that profits had been made, but he was unable to determine their amount and, therefore, he awarded interest at 5 per cent. per annum in lieu of such profits. This is just a method of calculation of the profits on a reasonable basis and no exception can be taken to it. If the matter was before the Civil Court and the Civil Court found that there was no proper material before it on which to calculate the amount of the profits made by the respondent, the Civil Court too would have adopted some such method as has been adopted by the arbitrator.

8. So far as the second part of the interest is concerned the appellant relies upon section 29 of the Arbitration Act, which runs:‑-- "Where and in so far as an award is for the payment of money the Court may in the decree under interest, from the date of the decree at such rate as the Court deems reasonable, to be paid on the principal sum as adjudged by the award and confirmed by the decree." Before proceeding further it may be explained here that the arbitrator directed the payment of Rs. 8.000 by instalments. In case of default in payment of any single instalment, the entire amount was to become immediately recoverable and future interest was made payable at the rate of 3 per cent. per annum. It is this interest with which we are now concerned. Learned counsel for the appellant interprets section 29 as laying down by implication that it is only the Court which is to pass the decree as can make a provision for interest and that it is not within the jurisdiction of the arbitrator to grant interest which is payable on the failure of the judgment‑debtor to pay the amount of the decree.

9. While we do not agree that section 29 altogether bars al decision as to post‑decree interest by the arbitrator we would accept that he cannot award such interest unless the award of interest was included in the reference. An arbitrator decides only a dispute between the parties. If the dispute is as to what is the amount which one person is liable to pay to another, the arbitrator can only determine that amount and cannot merely because a dispute as to liability has been referred to him give a direction that if the party which is liable does not pay the amount by a particular date, he should also be liable to pay interest. In the matter of arbitration between G. Morphett and others, and Rober Morphett ((1845) 23 L J Q B 259), it was held that an arbitrator was not entitled to award interest. The reason given was that was not the matter referred to him. This judgment was followed by Greaves J. in Sewdatrai Narsaria v. Tata Sons Ltd. (A I R 1921 Cal. 576). In Bhowanidas Ramgobind v. Harasukhdas Balkishendas (A I R 1924 Cal. 524), the learned Judges did not agree with Greaves J. They said it could be laid down as an inflexible rule of law that an arbitrator could not award interest. If by saying that it was not an inflexible rule the learned Judges meant that a reference could be made to the arbitrator even with respect to the payment of future interest, we have no quarrel at all with what was laid down. But that does not appear to be the case and the learned Judges seem to be of the opinion that even without a specific reference to the arbitrator, he would have authority to award post‑decree interest. For this position the learned Judges did not give any reasons. They said about 23 L J Q B 259 that it was decided on its special facts. With the greatest respect it appears to us that it was decided on a question of principle. We are of the opinion that in the absence of any specific reference to an arbitrator on a question as to what interest is to be paid sub sequent to the passing of the decree, the arbitrator does not possess any authority to award post‑decree interest. His jurisdiction is P limited by the terms of his reference. If the reference be to him only as to the liability of a person he can only determine that liability.

10. However, on a perusal of the record we have come to the conclusion that in this case the reference to the arbitrator included the award of post‑decree interest. The order of the Court which made reference to the arbitrator said that he was not only to determine the amount payable but also to frame a scheme for settlement of accounts. It has not been contended before us by learned counsel for the appellant that this order of the Court was not in accord with the statement or intention of the parties. The framing of a scheme for settlement of accounts does include provision as to payment by instalments and award of interest on failure to pay the instalments. We find, therefore, that there is no force even in this contention of learned counsel for the appellant.

11. This appeal is dismissed with costs. K.M.A. Appeal dismissed.