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SC ruling on setting aside ex-parte decree

R.N. Sahai

In Union of India and others vs. Manager, Jain & Associates (Civil Appeal No. 1059 of 2001 decided on February 6, 2001), the question before the Supreme Court was: Whether provisions of Order IX Rule 13 of the Code of Civil Procedure, 1908 (setting aside ex-parte decree against defendant) or the principles thereof are applicable in a case where objections under Section 33 of the Arbitration Act, 1940 (`the Act') are not filed, and ex-parte decree is passed on the basis of the award filed before the cour t by making the award rule of the court.

The matter came to the Supreme Court because the Calcutta High Court had rejected the application for setting aside the ex-parte decree relating to arbitration award solely on the ground that judgment and decree passed in terms of Section 17 of the Act w here no objections are filed before pronouncing judgment and passing the decree cannot be said to be an ex-parte decree, inasmuch as there were no plaintiff and defendant in the suit.

The question was finally decided by the Division Bench of the Supreme Court comprising Mr Justice M.B. Shah and Mr Justice S.N. Phukan holding that the provisions of Order IX, Rule 13 of the CPC are applicable to the ex-parte decree under Section 17 and the objections can be allowed to be filed after setting aside the decree and condoning delay in terms of the Limitation Act, 1963.

The relevant law is brought out by the judgment as follows:

Section 41 of the Act leaves no doubt that in a proceeding where an application is filed for passing the decree on the basis of the award submitted by the arbitrator, the provisions of the CPC are applicable and there is no provision which excludes opera tion of Order IX.

In view of Section 141 of the CPC, the procedure prescribed in the Code is to be followed as far as it can be made applicable to all proceedings in the court of civil jurisdiction.

Section 5 of the Limitation Act, 1963, which inter alia provides for extension of prescribed period of limitation in making application in the civil proceedings, if the applicant satisfies the court that he had sufficient cause for not making application within such period, is also applicable.

For filing objection application, the relevant provision is Article 119 of the Limitation Act which inter alia provides that period of limitation is 30 days for filing the award in the court from the date of service of notice of the making of the award, and 30 days for setting aside the award or getting an award remitted for reconsideration from the date of service of notice of the filing of the award.

Before pronouncing judgment, the court has to apply its mind to arrive at the conclusion whether there is any cause to modify or remit the award. Further, the phrase `pronounce judgment' would itself indicate judicial determination by reasoned order for arriving at the conclusion that decree in terms of award be passed.

When the court is required to proceed without objection application under Section 30 or 33 of the Act, it cannot pronounce the judgment without considering the provisions of Sections 15 and 16 of the Act, which provide for modification or correction of a ny award or for remitting it to the arbitrator for re-consideration.

Once it is held that provisions of CPC are applicable and if the party who seeks decree in terms of the award is absent, the court may refuse to pass a decree. Even in case of non-speaking award, the court is required to follow mandate of Sections 15 and 16 of the Act before pronouncing the judgment.

In arbitration proceedings even if the suit is not filed, procedure provided in CPC is applicable, and there is no reason to hold that as no party is described as plaintiff or defendant, Order IX would not be applicable. The party who seeks decree in ter ms of award can be held to be plaintiff, and the party who objects to such award can be treated as defendant.

If the contention that for application of CPC there must be suit, plaintiff, defendant or written statement is accepted, the provision of Section 41 of the Act and Section 141 of CPC would be nugatory.

The provisions of CPC are specifically made applicable, and there is no reason to hold that Order IX Rule 13 would not be applicable in a case where judgment is pronounced under Section 17 of the Act in absence of objection application tendered by the pa rty objecting to the award. For all purposes, such decree is ex-parte for the party objecting to the award.

Order IX Rule 6 CPC provides that where the plaintiff appears, and the defendant does not appear when the suit is called for hearing, then if it is proved that summons was duly served, the court may make an order that suit be heard ex-parte. After passin g such order, if a decree is passed ex-parte against the defendant under Rule 13, the court has power to set it aside if it is satisfied that summons was not duly served or that defendant was prevented by any sufficient cause from appearing when the suit was called on for hearing.

Similarly, if party objecting to the award satisfies to the court that for sufficient reasons objection application was not tendered within prescribed time, the court has power to set aside such decree. Therefore, if application for setting aside the awa rd is filed beyond the prescribed time and sufficient cause for condoning the delay in filing objection application is established, the court has power to set aside such decree by following the procedure prescribed under Order IX Rule 13 CPC.

(By arrangement with Corporate Law Adviser, New Delhi.)

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