# HARI KRISHAN WATIAL v. VAIKUN1H NA1H PANDYA JULY 18,_ 1973

- **Citation:** [1974] 1 S.C.R. 259
- **Court:** Supreme Court of India
- **Decided:** 1974
- **Case number:** Civil Appeal No. 1433 of 1967
- **Bench:** D. G. Palekar, A. Alagiriswami
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/hari-krishan-watial-v-vaikun1h-na1h-pandya-july-18-1973-5964
- **Pages:** 7

## Headnote

Arbitration Act (JO of 1940) s. 28 and cf. (3) of Schedule-Scope of.
Disputes haying arisen between the appe11ant and the respondent, they were
referred to arbitration in accordance with the agreement entered into between
the parties. The arbitrator gave his award. The appellant appTied for filing
of the award into Court and for making it a rule of Court. The validity of
the award was chalienged by the respondent, and the trial Court and the
High Court set it aside on the grounds :
( 1) that the award was made· after the prescribed period and (2) that the
agreement for arbitration was defective on account of vaguenes5· and uncertainly.
Allowing the appeal to thi:5 Court and remanding the matter to the High
Court for disposal.
HELD : (I) Under cl. (3) of the Schedule to the Arbitration Act, 1940,
the arbitrator i~ expected to make his~ award within four months of his entering
on the reference or on his being called upon to act or within such extended
time as the Court may allow.
Reading the clause with s. 28 of the Act the
power to enlarge the time for making the award is vested in the Court and
not in the arbitrator. Section 28 (2), however, indicates an exception. namely
when the parties agree to such enlargement after the arbitrator enters on the
arbitration. But tl)e section does not require that the parties should stipulate
in the arbitration agreement itself, for such enlargement of time by a subse·
quent agreement. Even in a case where there is no such stipulation in the
original agreement the arbitrator is· entitled to enlarge the time if after entering
on the reference the parties to the arbitration consent to such enlargement.
(26!G-H; 262A-D]
In the present case, the enlargement of time for making the award
wa~
on the request and mutual consent of the parties durinK arbitration, and there·
fore, the award made within the extended time must be
deemed to be valid.
[263A-C]
(2) A perusal of the agreement in the background of the di•pote5 that
had arisen shows that the agreement was neither vague nor uncertain. In fact,
the parties never complained before the arbitrator of any such va1?Ueness or
uncertainty.
[263C; 264B]

## Text

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HARI KRISHAN WATIAL
v.
VAIKUN1H NA1H PANDYA
JULY 18,_ 1973
259
(D. G. PALEKAR AND A. ALAGIRISWAMI, JJ.]
Arbitration Act (JO of 1940) s. 28 and cf. (3) of Schedule-Scope of.
Disputes haying arisen between the appe11ant and the respondent, they were
referred to arbitration in accordance with the agreement entered into between
the parties. The arbitrator gave his award. The appellant appTied for filing
of the award into Court and for making it a rule of Court. The validity of
the award was chalienged by the respondent, and the trial Court and the
High Court set it aside on the grounds :
( 1) that the award was made· after the prescribed period and (2) that the
agreement for arbitration was defective on account of vaguenes5· and uncertainly.
Allowing the appeal to thi:5 Court and remanding the matter to the High
Court for disposal.
HELD : (I) Under cl. (3) of the Schedule to the Arbitration Act, 1940,
the arbitrator i~ expected to make his~ award within four months of his entering
on the reference or on his being called upon to act or within such extended
time as the Court may allow.
Reading the clause with s. 28 of the Act the
power to enlarge the time for making the award is vested in the Court and
not in the arbitrator. Section 28 (2), however, indicates an exception. namely
when the parties agree to such enlargement after the arbitrator enters on the
arbitration. But tl)e section does not require that the parties should stipulate
in the arbitration agreement itself, for such enlargement of time by a subse·
quent agreement. Even in a case where there is no such stipulation in the
original agreement the arbitrator is· entitled to enlarge the time if after entering
on the reference the parties to the arbitration consent to such enlargement.
(26!G-H; 262A-D]
In the present case, the enlargement of time for making the award
wa~
on the request and mutual consent of the parties durinK arbitration, and there·
fore, the award made within the extended time must be
deemed to be valid.
[263A-C]
(2) A perusal of the agreement in the background of the di•pote5 that
had arisen shows that the agreement was neither vague nor uncertain. In fact,
the parties never complained before the arbitrator of any such va1?Ueness or
uncertainty.
[263C; 264B]
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1433 of 1967.
Appeal by soecial leave from the judgment and order
dated
December 7, 1966 of the Allahabad High Court in F.A.F.O. 31 of
1963.
B. D. Sharma. for the appellant.
Hardayal Hardy. Madhav Prasad and M. V. Goswamy, for respondents l(a) to l(e).
The Judgment of the Court was delivered by
H
PALEKAR, J.-This is an appeal by special leave from an order
of the High Court at Allaliabad dated December 7, 1966, by which
the Court. in agreement with the trial court, superseded a Reference
to Arbitration.
0!60
SUPREME COURT REPORTS
[ 1974] J. S.C.R.
Hari Krishna Wattal and Vaikunth Nath Pandya carried on business in partnership under the name and style of 'Wattal & Co.'.
Differences having arisen between them, a reference was made to
the Arbitrator in accordance with the agreement under the partnership deed.
The Arbitrator, Shri Bagchi, Advocate. gave an award
and Hari Krishna Wattal applied under section 14 of the Arbitration
Act for filing of the award and for making it a rule of the Court.
Objections were filed by Vaikunth Nath Pandya.
The award was
challenged on several grounds.
The Court of the first instance held
inter-alia that the award dated February 27, 1959 was invalid
on
the ground, firstly, that the award had been passed after the prescribed period for making the award and secondly that the reference
agreement was defective on account of vagueness and uncertainty.
Hari Krishna Wattal filed an appeal in the High Court. The learned
Single Judge who heard the appeal agreed with the trial-court on
the two above grounds and superseded the reference.
It is contended by Mr. Sharma that both the Courts were in error
in holding that the award was invalid on the aforesaid grounds.
Ex. 13 is the agreement to refer the disputes between the parties.
The agreement is dated 5-2-1958 and the award, as already stated,
was made much beyond four months from the date of the reference.
Prima-facie it wilJ be mvalid unless the time for enlargement for
making . the award was legally extended.
It is contended for the
appellant that the time had been legally extended by the mutual
written consent of the parties and hence the award was not liable
to be set asifle. It will appear from the record that the time was
extended not less than six times.
The first extension was from
31-5-1958 to 31-7-1958 and the last extension was from 29-1-'1959
to 28-,2-1959.
None of these six extensions was for the benefit of
the appellant.
Five extensions were given for the convenience of
the resoondents and one for the convenience of the Arbitrator.
On
each occasion, however, the appellant and the respondents had mutually agreed to the extension in writing.
The agreement for enlargement of time was generally in the following terms :
"IT IS THEREFORE AGREED BETWEEN TIIE PARTIES AS
BELOW:-
.
(1) That Shri A. K. Wattal, constituted attorney for Shri
H. K. Wattal and Shri Vaikunth Nath Pandya agree
to give further time to the Arbitrator to
give his
award on any date till the 31st of July, 1958.
!2) That the said parties further agree that they would
accept such award, if given on or before 31st of July
1958, as a valid award, and would not raise any
objection on the score of its having been delivered beyond four months of the reference to arbitration."
It is not disputed that if such mutual agreement between the parties
to the arbitration was capable of legally effecting the enlargement of
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H. K. WATTAL v. v. N. PANDYA (Palekar, !.)
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time for- making the award then the award could not be challenged
on the particular ground that it had been delivered beyond four months
of the reference .
. Section 3 of the Arbitration Act. 1940 provides :
"An arbitration agreement, unless a different intention is
express~d therein, shall be deemed to include the provisions
set out in the First Schedule in so far as they are applicable
to the reference."
The First Schedule has 8 clauses describing the implied conditions
of an arbitration agreement. Clause 3 reads as follows :
"The arbitrators shall make their award within four
months after entering on the reference or after having been
called upon to act by notice in writing from any party to the
arbitration agreement or within such extended time as the
Court may allow."
The power of the Court to extend time contained in section 28,
which is as follows :
"28. Power to Court only to -enlarge time for making
award. ( 1) The Court may, if it thinks fit, whether the time
for makin!J the award has expired or not and whether the
award has been made or not, enlarge from time to time the
time for making the award.
(2) Any provision in an arbitration agreement whereby
the arbitrators or umpire may, except with the consent of
all the parties to the agreement, enlarge the time for making
the award, shall be void and of no effect."
The High Court was of the opinion that there are only two methods
for enlarging the time.
The_ first method is securing an order from
the Court and the second method is to stipulate in the arbitration
agreement for extension of time by a subsequent agreement. The High
Court held that the general plan of section 28 suggested
that the
Legislature did not contemplate any third method for extension of
time. Since, in the present case, the arbitration agreement itself did
not stipulate for extension of time by a subsequent agreement and
there was no order of a Court extending the time the award was invalid.
The question depends upon the true construction of section 28.
There is no doubt that the Arbitrator is expected to make his award
within four months of his entering on the reference or on his being
called upon to act or within such extended time as the Court. m~y
allow. Reading clal(l8e 3 of the Schedule along with section 28 one
finds that the power ~~arge the time is vested in the Court and not
in the Arbitrator. Gause 3 and section 28(1) exclude by necessary
implication the power of the Arbitrator to enlarge the time. This is
emphasised by section 28(2) which provides that even when such a
provision giving the Arbitrator power to enlarge the time is contained
in the agreement, that provision shall be void and of no effect. The -
262
SUPREME COURT REPORTS
[ 1974 j 1 s.c.a.
headnote of section 28 brings out the force of this position in law by
providing that the power is of the Court only to enlarge time for
making the award.
Sub-section 2 of section 28; however, indicates one exception to
the above rule that the Arbitrator cannot enlarge the time, and that
is when the parties agree to such an enlargement. The occasion for
the Arbitrator to enlarge the time occurs. only after :1e is called upon
to proceed with the arbitration or he enters upon the reference. Hence,
it is clear that if the parties agree to the enlargement of time after the
Arbitrator has entered on the reference, the Arbitrator has the power
to enlarge it in accordance with the mutual agreement or consent of
the parties. That such a consent must be a post-reference consent, is
also clear from setcion 28(2) which renders null and void a provision
in the original agreement to that effect. In a sense where a provision
is made in the original agreement that the Arbitrator may enlarge the
time, such a provision always implies mutual consent for enlargement
but such mutual consent initially expressed in the original agreement
does not save the provision from being void.
It is, therefore, clear
that the Arbitrator gets the jurisdiction to enlarge the time for making
the award only in a case where after entering on the arbitration the
parties to the arbitration agreement consent to such enlargement of
time.
The questhn, however, is whether it was necessary to stipulate
in the arbitration agreement itself for the C'.1largement of time by a
subsequent agreement. In our opinion, sub-section 2 of section 28
does not say that such a stipulation should be in the arbitration agreement itself. It only tells us in which specific case of mutual consent
a provision for enlargement of the time for making the award, if inserted in the agreement, will have the provision from being null and
void. It does not purport to lay down that such a specific case of
mutual consent should, in order to become effective, be part of the
original agreement between the parties.
The above interpretation is in consonance with the fundainental
principles of arbitration. The arbitrator gets his jurisdiction to make
a binding award on an agreement between the parties to refer a dispute to him.
The agreement. between the parties is the foundation
of the jurisdiction of the Arbitrator.
Like any contract by mutual
consent of the parties, the terms of the contract can be modified. Even
in a case where the Arbitrator enters on the reference on an invalid
agreement it is open to the parties to enter into a fresh agreement to
refer the dispute to the Arbitrator while it is pending adjudication and
in ~uch an event the proceedings before the Arbitrator can be upheld
as referable to that agreement and the award will not -Oe open to
attack as without jurisdiction. See : Weverly Jute Mills Co. Ltd. v.
Raymon & Com. (l ndia) Private Ltd. ( 1) Such being the power of
mutual consent of the parties in the sphere of arbitration one does not
see why by mutual agreement the parties cannot enlarge the time for
makin!! the award when the Arbitrator has entered on the reference
and is proceeding with the arbitration.
(!) [1963) 3 S. C. R. 209, 226.
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H. K. WATTAL V. v. N. PANDYA (Palekar, !.)
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In our view, therefore, section 28(2) does not provide that the
Arbitration agreement alone should stipulate that the Arbitrator may
extend the time on a subsequent agreement between the parties. Even
in a case where there is no such stipulation in the original agreement,
the Arbitrator is entitled to enlarge the time if after entering on the
reference the parties to the arbitration consent to such enlargement.
In the present case, the enlargement of time for making the award
was on the request and mutual consent of the parties during arbitration and, therefore. the award made within the extended time must be
deemed to be valid.
The second ground on which the reference was superseded was
that the arbitration agreement was defective on account of vagueness
and uncertainty.
We have carefully gone through
the
arbitration
agreement Ext. 13 dated 5-2-1958 and we think that the High Court
was in error in thinking that the agreement was vague and uncertain.
It will be seen that the agreement is between Hari Krishna Wattal on
the one hand and Shri Vaikunth Nath Pandya on the other. The long
preamble shows that they were doing business in the name of Wattal
& Co. and disputes had arisen between them with regard to certain
amounts which were put to the debit of Vaikunth Nath Pandya and
his sons which Wattal insisted must be paid to him.
But Vaikunth
Nath Pandya was challenging the correctness of the entries in· the
accounts about the business of Wattal & Co. It may be stated here
that Vaikunth Nath Pandya had two sons.
One son named Rishi
Nath Pandya was the Manager of Kailash Carpet Co. a proprietory
concern of Hari Krishna Wattal. There were accounts in the name of
Rishi Nath both in Kailash Carpet Co. and Wattal & Co. The second
son Ravinder Nath was doing business as Ravindra Bros. He had a
cash credit account with Wattal & Co. It appears that some dispute
was raised with regard to the correctness of the accounts in the names
of the two sons in the books of Wattal & Co. but if the accounts
were held to be correct there was no dispute that the father Vaikunth
Nath Pandya had agreed to accept the liabilities on behalf of the sons.
So, the agreement of reference contained these four clauses :
"l. That the said Arbitrator shall determine what amounts,
if any, are due to the first party (Wattal) from the
second party
(Pandya)
and
his
sons
including
Ravindra Brothers, and how the same should be paid
by the second party (Pandya).
2. That the arbitrator shall allow the second party to
check and examine the accounts of Wattal and Co.
not only from 1-5-55 but also for any such earlier
period as the arbitrator thinks fit.
3. That the Arbitrator shall be entitled to hear and determine the other grievanceJi of the parties, if any.
4. That the Arbitrator shall determine the amount payable by one party to the other after taking into consideration the sums due to or due by the second party
or his sons including Ravindrn Brothers from or to
the first party respectively."
S-L373Su~.c. I.174
264
lUPREME COURT REPORTS
[ 1974] 1 s.c.R.
We have failed to understand what was vague and uncertain about
the agreement. It appears from the r~cord that the Arbitrator had
called upon Wattal to formulate his claims and then repbes on behalf
of Pandya were duly filed.
Accounts were inspected from time to
time by Pandya, full opportunity being given to him to do .so as. !'er
the reference agreement itself. Arguments were also filed m wntmg
by both the sides. It does not appear !~at any complaint :vas made
on behalf of the parties before the Arbitrator about anything vagu.e
or uncertain in the agreement.
Once it is remembered that \he ar.b1tration was with reference to the business of Wattal & Co. of which
the parties were the partners, it is clear that the four clauses referred
to above must be read against the background that all of them are
in the context of the business of Watta[ & Co. The mere fact that
the Arbitrator had looked into accounts of Kailash Carpet & Co. in
order to verify any entries made in the books of the business of
Wattal & Co. would not mean that some how the accounts of Kailash
Carpet Co. would be interpolated into the books of Wattal & Co. The
learned Jndge agrees that if one looks at the preamble of the agreement, that gave the impression that the Arbitrator had to decide
merely the disputes relating to the business of Wattal & Co. We must
say with respect that this impression is the correct impression.
We
do not see how clauses 1 and 4 enlarged the scope of arbitration proceedings.
There were entries in the books of Wattal & Co. relating
to the two sons of Pandya. The father had undertaken by the agreement to accept the true liabilities of his sons as disclosed in the books
of the business of Wattal & Co. That was a perfectly legal liability
the father was entitled to undertake on behalf of his sons. The
Arbitrator had to deal with the disputes between the two parties in
relation to business of Wattal & Co. And, if for deciding the matter
he required verification of the entries in the books of accounts, we do
not see why the Arbitrator should not examine any other accounts,
even the accounts of Kailash Carpet Co. Nor can we find any sufficient objection to clanse 3 of the agreement referred to above. That
clause says that the Arbitrator shall be entitled to hear and deterl:nine
the other grievances of the parties, if any. It may be that the wording of the clause is rather loose, but once you remember that there
are disputes with regard to the business of Wattal & Co. that clause
must be understood in that context.
The 'gyievances' mean nothing
more than disputes.
Two specific disputes were mentioned in clauses
1 and 2, clause 3 made provision for any other dispute which may
legitimately arise on an examination of the accounts of the business.
In other words, all disputes between the parties relating to the debits
and the credits in the accounts of the business of Wattal & Co. were
the subject-matter of the arbitration.
We do not agree
with
the
le~r~ed Judge that it was possible to bring in any dispute of the parties
w1thm the scope of the arbitration proceedings. We do not therefore,
think that the agreement was bad on account of vaguenes; or uncertainty.
The two grounds on which the High Court superseded the referei:ioe had not been substantiated. The award cannot be challenged
either on the ground that it was made after the prescribed period or
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that the agreement for arbitration was defective on account of vagueness and uncertainty.
Since the other points arising in the appeal
before the High Court had not b_een dealt with, the case will have to
go back to the High Court to be disposed of in accordance with law
after hearing the parties on points not agitated before the High Court.
The appellant shall get his costs from the respondents in this appeal.
V.P.S.
•