D.M. Dharmadhikari, J.
The dispute between partners of the firm M/s. Chaturbhujdas Vallabhdas and members of their families was referred for decision of the two Arbitrators one each appointed by the parties. The Arbitrators gave an award on 1-12-1994 which was made a Rule of the Court on 1-5-1996.
The present applicant preferred an appeal against rejection of his objections to the award which was registered as M.A. No. 740/96. We decided in the Division Bench that appeal on 19-12-1996. The appeal was partly allowed and the award was remitted for reconsideration in accordance with Section 16(1)(c) of the Arbitration Act. 1940. The relevant observations and opera-live part of the judgment of this Court in M,A. No. 740/96 decided on 19-12-1996 are reproduced hereunder as there is variance between the parties on the effect of the decision of this Court on the award originally passed on 1-4-1994 and decree passed thereon :
"We can therefore, exercise our power u/s 16 of the Act by remitting the award to the arbitrators to pass a supplementary or a fresh award after taking into account the debts and liabilities of the dissolved firm."
"............... The Court below shall send the intimation to the arbitrators for reconsideration of their decision and remit them the award with directions to reconsider it with due regard to outstanding debts and liabilities of the dissolved partnership firm. The arbitrators shall be granted three months'' time to make a fresh or supplementary award from the date of communication of the order of this Court to them. The arbitrators shall submit their fresh decision or award to the lower Court and then the proceedings thereafter shall be conducted in accordance with the provisions of the Arbitration Act."
In accordance with the directions made in the appeal (quoted above) the arbitrators have reconsidered the award and passed a supplementary award on 2-7-1997. In the supplementary award, decision has been rendered by the arbitrators with regard to the debts and liabilities of the partnership firm. At this stage, it is necessary to mention that instead of setting aside the award made on 2-12-1994 by the arbtirators, this Court in M.A. No. 740/96 considered it fit to remit the award u/s 16(l)(c) of the Arbitration Act because in its opinion it contained a legal error. It has been held that the award is contrary to Sections 46 and 48 of the Partnership Act in as much as the arbitrators without considering the debts and liabilities of the firm apportioned the capital and investments of the partners. In the partnership, the partners are only entitled to the residue after working out the profits and loss. Holding thus, the conclusion of the Court recorded is as under :--
"Thus, where disputes between partners and their family members were referred to arbitration, and the arbitrator settled several of the matters clearly and distinctly but omitted to deal satisfactorily with the question of liabilities, this Court instead of setting aside the award can remit it for reconsideration in respect of the matter of liabilities unsatisfactorily dealt with. Accordingly, the power or remand is being exercised by us in the ends of justice and because of the apparent illegality mentioned above."
The operative part of the order of the Court containing the directions to the arbitrators have already been reproduced above in the earlier paragraph of this order.
During pendency of M.A. No. 740/96, the execution proceedings were stayed. After a supplementary award was made by the arbitrators on 2-7-1997 deciding the question also of debts and liabilities of the partnership firm, the execution proceedings were sought to be revived by the non-applicants. The present applicant objected to the execution of the decree passed in terms of the original award made on 1 -12-1994. On behalf of the applicant it was submitted that until the supplementary or fresh award made by the arbitrators on 2-7-1997 is adjudged valid after allowing the parties right or raising objections to the same and until it was made a Rule of the Court by passing decree in terms thereof, the decree passed in terms of the original award dated 1-12-1994 cannot be executed.
The executing Court by its impugned order passed on 16-7-1997 rejected the objections to the execution raised by the present applicant and in execution of the decree passed on the earlier award directed issuance of a warrant of attachment for realisation of a sum of Rs. 22,01,925/-with interest and costs from the applicant. The executing Court in its order deciding to proceed with the execution held that as the arbitrators in their fresh or supplementary award made on 2-7-1997 have held that the earlier award made by them on 1-12-1994 would remain unchanged, the earlier award and the decree passed thereon is executable irrespective of the pendency of the adjudication of the validity of the fresh or supplementary award.
The learned counsel, Shri Ravish Agrawal, appearing for the applicant questions the correctness of me impugned order of the executing Court. He submits that u/s 39 of the Arbitration Act appeal lies only against the order setting aside or refusing to set aside the award. u/s 17 of the Arbitration Act, an award becomes a Rule of Court when a judgment and decree in terms of the award is passed after its validity is adjudged by considering the objections raised to it by the parties. In terms of Section 17, judgment and decree passed in terms of the award is not appealable "except on the ground that the decree so passed is in excess of or otherwise not in accordance with the award.'' On behalf of the applicant it is argued that once this Court had remitted the original award for reconsideration by the arbitrators, and the arbtirators have made a fresh or supplementary award, the original award and the decree passed thereon does not remain executable until the fresh or supplementary award is made a Rule of the Court by passing decree in terms thereof. It is submitted that the decree earlier passed on the basis of original award has lost its efficiency or executability after the order of remittance made by this Court in appeal against the order refusing to set aside the original award.
Shri Imtiyaz Hussain, learned counsel appearing for the non-applicants, on the other hand, submitted that the original award has been left intact and unchanged by the arbitrators in the supplementary award passed by them on 2-7-1997. The decree passed in terms of the original award was not set aside by this Court in appeal and only the matter was remitted to the arbitrators to pass fresh or supplementary award. The original award and the decree passed thereon, therefore, is executable irrespective of the pendency of the adjudication of the validity of the supplementary award. Reliance is placed on observations of the Supreme Court in paragraph 12 of case reported in Mattapalli Chelamayya v. Mattapalli Venkataratnam.
We have given careful thought to the legal submissions made by the counsel appearing for the parties in the light of the relevant provisions contained in the Arbitration Act and the contents of the judgment passed in appeal and the two awards passed by the arbitrators.
It is to be noticed that this Court in the appeal remitted the case for fresh consideration by the arbitrators as in the opinion of this Court without considering the debts and liabilities of the firm and required by Sections 46 and 48 of the Partnership Act, the captial and investments could not have been apportioned between the partners. This Court without setting aside the original award, therefore, remitted the matter to the arbitrators for reconsideration of the award and purposely gave them an option to make a fresh award or to pass a supplementary award dealing with the debts and liabilities of the partnership firm. What we notice from the supplementary award made on 2-7-1997 is that the arbitrators, amongst other issues, duly considered the tax dues and the liabilities which are likely to arise against the firm in future because of its pending" appeals before the higher Taxing Authorities. The arbitrartors have directed one of the parties, namely, Suresh Kumar Agarwal to retain the deposits made by his mother-in-law and invest the same in a manner to earn on it 15% interest per annum so that any future liabilities towards tax may be discharged by the partners in proportion of half and half. In this manner, the arbitrators have decided the question of debts and liabilities of the firm and have, therefore, stated that the original award made on 1-12-1995 would remain unchanged.
In our opinion, as is apparent from the provisions of Section 17 read with Section 39 of the Arbitration Act, when an award originally made is remitted to the arbitrators for reconsideration the decree passed on such an award remains suspended until a fresh award is made by the arbitrators. In the instant case, this Court had given an option to the arbitrators to make a fresh award or supplementary award dealing satisfactorily with the question of debts and liabilities of the firm. The arbitrators could have made a fresh award or a supplementary award as they have done. Here the dispute referred was between the partners of the firm and their relations who had made investments and deposits in the firm. The decision of the arbtirators is to be found in the original award to be read along with the supplementary award. It cannot be held that the dispute has been decided by two separate awards. The award originally made with supplementary award has to be held to be one indivisible decision of the arbitrators. It is thus an award of the arbitrators written on two papers at two different stages of sittings prior to and after the remittance of the matter to them for consideration. By the two awards, all disputes referred to between the parties to the arbitrators have been decided. The submission made on behalf of the applicant gets support from the provisions of Section 17 of the Arbitration Act. In our opinion, when an award, on the basis of which the decree is passed, is remitted in appeal for reconsideration and the arbitrators instead of passing a fresh award, pass a supplementary award, the decree passed pursuant to the earlier award remains in suspense and is not executable until the supplementary award along with original award is made Rule of the Court u/s 17 after permitting the parties to raise objections to the award in accordance with the provisions of Section 30 of the Arbitration, Act.
The aforesaid view taken by us gets some support from the views expressed by the learned Author S.D. Singh in is book ''Law of Arbitration'' Tenth Edition, page 333 which reads thus :
"11. Position of a revised award, after it is once remitted.-- As has been pointed out in
The argument advanced on behalf of the non-applicant cannot be accepted that there are two separate awards which are distinct and separate. The original award cannot be held to be executable irrespective of the adjudication of the validity of the supplementary award. As has been seen above, from the contents of the two orders, it cannot be held that they are separate or divisible. As has been stated above, in case the decision of the arbitrators in the matter of extent and discharge of debts and liabilities of the partnership firm does not get approval of the Court u/s 30 of the Act and is not made a Rule of the Court, it will certainly have an adverse effect on the validity of the original award which may not have been set aside by this Court in appeal because it chooses to remit the same to the arbitrators only for reconsideration. This Court is of the definite opinion that the decision of the arbitrators on the dispute, although is containedin two awards but they together constitute complete decision rendered by them whereby the debts and liabilities of the firm have been determined and the capital and investments by the parties have been apportioned on the basis of losses and profits. The two awards are inseparable and indivisible. For the aforesaid reason the decisions relied on behalf of the non-applicants in the case of Mattapalli Chelamayya (supra) is distinguishable. The facts of this case are also distinguishable which would be apparent from the facts narrated in that case in the part of paragraph 11 of the judgment which read as under:--
"In the present case the document evidences two transactions which can be severed from each other. One transaction creates an independent personal obligation to pay a certain sum of money and the other transaction namely the charge merely strengthens the first transaction by adding a right to proceed against the charged property. In our opinion, the High Court was right in directing that the second transaction with regard to the charge being a severable transaction can be validly ignored and to the extent that it declares the personal obligation to pay the transaction, not being required to be compulsorily registered, the award was admissible in evidence."
It is on the above facts that in paragraph 12 of the judgment it was held as under:--
"It was further contended for the appellants that an award is one and indivisible and to direct that effect be given to a part of the award and not to the whole of the award would amount to modifying the award and that was impermissible. We do not think that there is any substance in this contention also. Where a severable part of an award cannot be given effect to for a lawful reason, there is no bar to enforce the part of which effect could be justly given. See Mt. Amir Begam v. Badr-Ud-din Hussain AIR 1914 PC 105 where as a general principle it is laid down that when a separable portion of an award is bad, the remainder of the award, if good, can be maintained. By giving effect to a part of the award in this case no prejudice is caused to the appellants. In fact they stand to benefit. As the award stands, the appellants would have been responsible not only to pay the amounts personally, but also from the property which was charged. Since the charge part is eliminated for want of registration, they are freed from the additional liability. It is true that judgment should be pronounced according, to the award, but that does not bar giving effect to the severable part of the award if it could be justly done. Departure from the award or a part of the award is barred only in those cases where the award or a severable part of it is lawful and capable of being given effect to."
The facts obtaining in the case of M. Chelamayya (supra) and the ratio of that case contained in paragraph 12 of the judgment are not at all attracted to this case and the reliance is totally misplaced.
It was then pointed out by the counsel on behalf of the non-applicants that the original award and decree passed thereon are under execution with regard to the immovable properties and the parties have willingly participated in execution proceedings in that regard. We can only say that the act of parties would not alter the legal effect of the statutory provisions as discussed by us above.
Consequently, this petition succeeds and is hereby allowed. The impugned order of the executing Court dated 16-7-1997 is hereby set aside. The executing Court is directed not to proceed with the execution of the decree dated 1-5-1996 in terms of the original award passed on 1-12-1994 until adjudication of the validity of supplementary award dated 2-7-1997 in accordance with the provisions of Sections 30 and 17 of the Arbitration Act.
