# NARAINDAS v. VALLABHDAS (Khanna, J.)"

- **Citation:** [1972] 2 S.C.R. 28
- **Court:** Supreme Court of India
- **Decided:** 1972
- **Case number:** Civil Appeal No. 194 of 1967
- **Bench:** K. S. Hegde, H. R. Khanna
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/naraindas-v-vallabhdas-khanna-j-5652
- **Pages:** 5

## Headnote

A'rbitration Act 10 of 1940--Person entitled to niaintenance out of
certain property whether necessary party to arbitration agreenient rrtating
ro tlispute t1hout that proper.ty-Reference made out of court-IUzether
all parties to reference 111ust sign an·ard in token of acceptance of cn~·ard:
Wlzetlzer prerious litigation about a property bars reference to ar/l1trat1on
of a fresh dispute about the property.
By an arbitration award given in 1933 D was given a maintl.!nJ.ncc
allowance enforceable against property allotted to the appellant and his
brothers and mother. Since the allowance was not paid D secured a decree
tor th< sale of houses belonging to the appellant and his brothers. The
property was purchased by respondents 4 and 5 who after obtaining sale
certificate from the court sought to obtain possession of the same.
On
8th April 1955 the appellant his brothers and mother entered into "" arbitration agreement with respondents 4 and 5. According to the agreement
respondents 4 and 5 gave up their claim to the houses purchased or them
in court auction and the arbitrators were to make award in respect of the
amounts to be pai<l by either of the parties as well as tlJe maintenance
allowance payable to D and to the appellant's mother.
The aribtrators
by their award dated 20th October 1956 made provision for the amounts
payable to different parties. They also made provision for the payment
of allowance to n as well as for her residence. After the award had been
put in court objections were filed against it. The Addition! District Judge
set aside the award inter a/ia on the ground that the awa·rd affected the
rights o'f D and she had not been made a party to the agreement. The
High Court reversed the judgment of the Additional District Judge.
In
appeal by certificate the appellant contended; (i) that the award was in_yalid because D was an interested party in the dispute relating to arbitration and she had not joined the arbitration agreement; (ii) that the reference to arbitrators was made out of court and as all the parties to the
arbitration agree~nt did not sign the award in token of their acceptance,
the same could not be made a rule of court; (iii) that because foere had
been earlier litigation about the house allotted to the appellant and his
brothers, the same could not be the subject matter of arbitration dispute,
HELD : (i) The rights of D remained intact and were in no way
affected by the award dated 20th October 1956. The maintenance allowA
B
c
D
E
11
ance payable to her was also kept as a charge over the immovable pro·
perty.
The fact that D did not sign the arbitration agreement as such
would not vitiate the arbitration proceedings. She did not raise any ohjecG
tion to the arbitration
proceedings
or
the
subsequent
ay.•ard.
Ac·
cording to counsel, she died three years ago. In the circumstances the question whether her rights were prejudicially affected by the award was purely
academic [31 El
(ii) An award given on a reference during the pendency of a suit relatirt"g to a dispute which is the subject matter of reference without obtaining the order of the Court cannot be enforced. The underlying reason for
H
the same is to avoid conflict of jurisdiction. However according to s. 47
df the Arbitration Act, 1940, an arbitration award otherwise obtained may
with the consent of all the parties interested be taken into consideration
...
••
A
B
c
D
NARAINDAS v. VALLABHDAS (Khanna, J.)"
29
as a compromise or adjustment of a suit by any court before whi_ch the
suit j<:i pending.' In such an event, the Award is enforced as a compromise
or adjustment of the suit because all the interested parties give their con·
sent to the award. When however, as in the present case, no suit is pending with respect to the subject matter of dispute and the parties choose
to refer a dispute to the arbitrators, it is not essential that the parties
should signify their consent to the. award before the same can be enforced.
Agreement <1pd ~assen~ a

## Text

28
NARAINDAS
I'.
V ALLABHDAS & ORS.
October IS, 1971
[K. S. HEGDE AND H. R. KHANNA, JJ.]
A'rbitration Act 10 of 1940--Person entitled to niaintenance out of
certain property whether necessary party to arbitration agreenient rrtating
ro tlispute t1hout that proper.ty-Reference made out of court-IUzether
all parties to reference 111ust sign an·ard in token of acceptance of cn~·ard:
Wlzetlzer prerious litigation about a property bars reference to ar/l1trat1on
of a fresh dispute about the property.
By an arbitration award given in 1933 D was given a maintl.!nJ.ncc
allowance enforceable against property allotted to the appellant and his
brothers and mother. Since the allowance was not paid D secured a decree
tor th< sale of houses belonging to the appellant and his brothers. The
property was purchased by respondents 4 and 5 who after obtaining sale
certificate from the court sought to obtain possession of the same.
On
8th April 1955 the appellant his brothers and mother entered into "" arbitration agreement with respondents 4 and 5. According to the agreement
respondents 4 and 5 gave up their claim to the houses purchased or them
in court auction and the arbitrators were to make award in respect of the
amounts to be pai<l by either of the parties as well as tlJe maintenance
allowance payable to D and to the appellant's mother.
The aribtrators
by their award dated 20th October 1956 made provision for the amounts
payable to different parties. They also made provision for the payment
of allowance to n as well as for her residence. After the award had been
put in court objections were filed against it. The Addition! District Judge
set aside the award inter a/ia on the ground that the awa·rd affected the
rights o'f D and she had not been made a party to the agreement. The
High Court reversed the judgment of the Additional District Judge.
In
appeal by certificate the appellant contended; (i) that the award was in_yalid because D was an interested party in the dispute relating to arbitration and she had not joined the arbitration agreement; (ii) that the reference to arbitrators was made out of court and as all the parties to the
arbitration agree~nt did not sign the award in token of their acceptance,
the same could not be made a rule of court; (iii) that because foere had
been earlier litigation about the house allotted to the appellant and his
brothers, the same could not be the subject matter of arbitration dispute,
HELD : (i) The rights of D remained intact and were in no way
affected by the award dated 20th October 1956. The maintenance allowA
B
c
D
E
11
ance payable to her was also kept as a charge over the immovable pro·
perty.
The fact that D did not sign the arbitration agreement as such
would not vitiate the arbitration proceedings. She did not raise any ohjecG
tion to the arbitration
proceedings
or
the
subsequent
ay.•ard.
Ac·
cording to counsel, she died three years ago. In the circumstances the question whether her rights were prejudicially affected by the award was purely
academic [31 El
(ii) An award given on a reference during the pendency of a suit relatirt"g to a dispute which is the subject matter of reference without obtaining the order of the Court cannot be enforced. The underlying reason for
H
the same is to avoid conflict of jurisdiction. However according to s. 47
df the Arbitration Act, 1940, an arbitration award otherwise obtained may
with the consent of all the parties interested be taken into consideration
...
••
A
B
c
D
NARAINDAS v. VALLABHDAS (Khanna, J.)"
29
as a compromise or adjustment of a suit by any court before whi_ch the
suit j<:i pending.' In such an event, the Award is enforced as a compromise
or adjustment of the suit because all the interested parties give their con·
sent to the award. When however, as in the present case, no suit is pending with respect to the subject matter of dispute and the parties choose
to refer a dispute to the arbitrators, it is not essential that the parties
should signify their consent to the. award before the same can be enforced.
Agreement <1pd ~assen~ are im11erative . only at the stage of referring the
JispJlle lo ar6itrators but not at tt.•o stage of the sward. [3 IH-320].
Jagaldas Damodar Modi & Co. v. Pursottam Umedbhai & Co., A.LR.
J 953 690, held in applicable.
(iii) A dispute is referred to arbitration because the parties agree to
such a reference and the mere fact that the property which is the subject
matter of dispute was also the subject ·matter df earlier litigation, cannot
prevent the parties to refer the dispute abouti that property to arbitration.
What is referred to arbitrators in such a case is the fresh dispute and
although the finding of the Court in the previous litigation may have a
bearing on the dispute -referred to the arbitrators, it would not stand in the
way cf reference of the fresh dispute to the arbitrators. [.32 FJ
CIVIL APPELLATE JURISDICTION:
Civil Appeal No. 194 of
1967.
Appeal from the judgment and order dated April 2 7, 1964 of
the Madhya Pradesh High Court in Misc. (First Appeal No. 60
of 1960.
S. N. Anand and Kailash Mehta, for the appellant.
E
S.S. Khanduja and K. C. Dua, for respondent No. I.
F
G
H
The Judgment of the Court was delivered by
Khanna, J.
This is an appeal on a certificate of fitness
granted by the Madhya Pradesh High Court against
the
judgment of that Court whereby that Court in appeal ~t aside
the order of the Additional District Judge, Jabalpur,
dismissed
the objections against an award and directed that the award be
made a rule of the Court.
Naraindas, appellant is the brother of Vallabhdas and Durgaprasad, respondents 1 and 2 and so.n of Smt. Sukhrani, respondent No. 3.
There were some arbitration proceedings in
1932
between the appellant and respondents 1 to 3 on one side and
Pannalal and Smt. Dulari Babu on the other side.
Those proceedings related to partition of property and a claim for maintenance allowance by Dulari Babu.
An award was
given
in
those proceedings and was made a rule of the Court on
13-12-1933.
According to the award, Dulari Babu was to get
a maintenance allowance of Rs. 12/- per mensem from the appellant and his brothers.
A charge was created of the mair.tenance
allowance on the house which fell as a result of partition to the
30
SUPREME COURT REPORTS
[1972] 2 S.C.R.
share of the appellant and respondents I to 3. It was also proA
vided that if the appellant and his brothers failed to pay the
monthly allowance, Dulari Bahu would be entitled to get the
house sold.
Out of the sale proceeds, Rs. 3,000/- were to
be
deposited in a bank on the condition that th~ ~ount of interest
would be paid to Dulari Babu but she would not be entitled to
draw the principal amount. On Dulari Bahu's death, Rs. 2,000/-
B
out of Rs. 3,000/- would be paid to the appellant and his brothers and Rs. 1,000/- to Pannalal.
The amount of maintenance payable to Dulari Bahu was
increased to Rs. 30/- per mensem in a suit brought by her and
decided on 8-10-1949.
As the appellant and his brothers did not pay the mainte.nance
allowance to Dulari Bahu, she, in execution of her claim for
maintenance allowance, got their houses situated
at Jabalpur
sold by Court auction.
The houses
were purchased for
Rs. 22,000/- by Sitaram and Laxmiuarain, respondents 4:
and
5.
After obtaining the sale certificate, respondents 4
and. 5
took proceedings for obtaining possession of the houses bnt they
were resisted by respondent No. 1.
The appellant
and
his
brothers further claimed that they had deposited some amount
with respondents 4 and 5.
The appellant and his brothers and
mother on one side and resppndents 4 and 5 on the other side
thereupon appointed four arbitrators, as per .agreement dated
8th April, 1955.
According to the agreement, respondents 4
;md 5 would have no claim in the· houses purchased by the1i1 in
Court auction and the arbitrators would make award in respect
c
D
E
of the amounts to be paid by either of the parties as well as
regarding the maintenance allowance payable to Durga Bahu and
Sukhrani Babu.
The arbitrators thereafter gave their award
dated 20th October, 1956 wherein they made provision for ·the F
amounts payable to different parties.
Regarding the amount of
maintenance allowance payable to Dulari Babu, the award provided that Rs. 3,000/- out ()f tiie sale proceeds would be
wi~
drawn from the Court and be deposited with Durgaprasad, respondent.
Durgaprasad was made liable to pay the amount of
Rs. 30/- per mensem as maintenance allowance to Dulari Bahu.
The award further provided
that out of the amount of G
Rs. 3,000/-, Rs. 1,000/- would be paid to Pannalal and
Rs. 2,000/- to Durgaprasad on the death of Dulari Babu. ~lari
Babu was also given a right of residence in a room and mamtenance allowance of Rs. 30 /- payable to her was made a charge
on the house allotted to Durgaprasad.
After the award had been put in Court, objections were fi!ed
against the award.
Learned Additional District Judge set aside
the award on ilie ground that the award affected the. rights of
H
I •
,.
..
A
NARAINDAS v. VALLABHDAS (Khanna, J.)
31
Dulari Bahu and she had not been made a party to the arbitra·
tion agreement.
The reference to arbitration as well as the
award, according to the Additional District Jildge did not amount
to an adjustment and wer~, therefore, invalid.
It was also held
that the award was in excess of the arbitration agreement. Some
B
other grounds were also given but we are not concerned with
them.
On appeal, the High Court reversed the decision of the
Additional District Judge and held that there w.as no infirmity in
the arbitration proceedings or the award.
In the result, the award
was made a rule of the Court.
Mr. Anand, on behalf of the appellant, has argued that
C Dulari Bahu was an interested party in the· dispute relating to
arbitration and as she did not join the arbitration agreement, !he
reference to arbitration and the subsequent award should be held
to be invalid.
There is, in our opinion, no force in this contention.
The dispute which was referred to the arbitrators related
to the houses in question which had been sold in Court auction.
The interest of Dulari Bahu· pertained only to the recovery of
D her maintenance allowance. According to the earlier award
which Dulari Bahu sought to enforce, she was to get the main·
tenance allowance from an amount of Rs. 3,000/- which was to
be kept in deposit.
The rights of Dulari Bahu in · this respect
remained in-tact and were in no way affected by the award dated
20th October, 1956. The maintenance allowance payable to her
E · was also kept as a charge over the immovable property.
The
fact that Dulari Bahu did not sign the arbitration agreement as
such would not vitiate the arbitration proceedings.
The present
is not a case wherein the arbitration proceedings are sought to be
assailed by Dulari Bahu.
On the contrary, it is the admitted
case of the parties that Dulari Bahu did not raise any objection
F
to the arbitration proceedings or the subsequent award on the
ground that her rights had been prejudically affected.
This
apart, we find that Dulari Bahu, according to the learned coun·
sel, died about three years ago.
In the circumstances, it would
be purely academic to dilate upon the question as to whether the
rights of Dulari Bahu were prejudicially affected by the award in
G question.
It is next argued by Mr. Anand that as the reference to arbitrat?rs was made o~t of Court and as all the parties to the arbitration agreement did not sign the award in token of their
acceptance, the same could not be made a rule of the Court.
Th.ere is no substance, in our opinion, in the above contention.
H It 1s alw~y~ open. to parties to refer a dispute to arbitration without the mtervenlI?n of the Court.
In case, a suit is pending in
respect of the. sub1ect matter of the dispute, there can be no valid
reference durmg the pendency of the suit, to arbitration without
32
SUPREME COURT REPORTS
(1972] 2 S.C.R.
the order of the Court.
The underlying. reason for that is to
A
avoid conflict of jurisdiction by both the Court and the arbitrator
dealing concurrently with the same dispute.
An award given on
/ a reference during the pendency of a suit relating to dispute which
is the subject matter of reference without obtaining the order of
the Court cannot be enforced.
The only exception to this rule
is· provided by the proviso to section 4 7 of the Arbitration Act
B
(Act 10 of 1940) according to which "an arbitration award
otherwise obtaiued may with the consent of all the parties interested be taken into consideration as a compromise or adjustment
of a suit by any Court before which the suit is pending".
In
such an event, the award is epforced as a compromise or adjustment of the ·suit because all the interested parties give their con- c
~nt to the award.
Where, however, as in the present case, no
suit is pending with respect to the subject matter of dispute and
the parties.choose to refer a dispute to arbitrators, it is not essential that the parties should signify their consent to the award
before the same can be enforced.
Any other view would run
counter to the entire scheme and abject of arbitration for the
settlement of disputes according to which, agreement and consent
D
are imperative only at the stage of referring the dispute to arbitrators but not at the stage of the award.
The decision of
Bachawat, J.
(as he then was) in Jugaldas Demodar Modi &
Cp. v. Pursottam Umedbhai & Co.(1) relied upon by the appellant has no bearing as the said case dealt with an arbitration
reference during the pendency of a suit.
E
We are also not impressed by the contention raised on behalf
of the appellant that because there had been earlier litigation
about the house allotted to the appellant and his brothers, the
same could not be the subject matter of arbitration dispute.
A
dispute is referred to arbitration because the parties agreed to
such a reference and the mere fact that the property which is the
F
subject matter of dispute was also the subject matter of an earlier
litigation, cannot prevent the pMties to refer the dispute about
that property to arbitration.
What is referred to arbitrators in
such a case is the fresh dispute and although the finding of the
Court in the previous litigation may have a bearing on the dispute referred to the arbitrators, it would not stand in the way of G
reference of the fresh dispute to the arbitrators.
It is not the
case of the appellant before us that the precise dispute which was
the subject matter of the award dated 20th October. 1956 had
been adjudicated upon earlier in a civil Court.
The appeal consequently fails and is dismissed with costs.
H
G.C.
Appeal dismissed.
-·
(I). A. I. R. 1953 p. 696
_
. '