1. ABDUS SATTAR, J.----This appeal by special leave is directed against the judgment and decree of a Division Bench of the High Court of East Pakistan, dismissing an appeal preferred by the appellant against the decree passed by a Subordinate Judge, Dacca, in terms of an award made by the arbitrators appointed by the Registrar of Tribunal of Arbitration of the Dacca-- Narayanganj Chamber of Commerce.
2. The respondent, Pak Jute Balers Ltd., claimed that the appellant Padri Narayan Agarwala entered into a contract on the 31st May 1957 for purchasing 1,000 bales of N. C. Cuttings at Rs. 95 per bale of 400 lbs. Not free on board Khulna. The bales were to be lifted within July 1957. The appellant failed to lift the goods within the stipulated period as a result of which the seller suffered a loss of Rs.
3. 16,000 being the difference between the price agreed and the market price. The respondent, on the 5th October 1557, referred the matter to the arbitration of Dacca-Narayanganj Chamber of Commerce in accordance with the terms of the contract. The Registrar of the Tribunal of Arbitration of the Chamber is said to have issued a notice to the appellant on the 12th October 1957, calling upon him to file his statement of the case. He then appointed the arbitrators on the 11th December 1957. The arbitrators accepted the claim of the seller-respondent and passed an award in its favour on the 10th April 1958, allowing Rs. 16,000. The award was filed in the Second Court of Subordinate Judge at Dacca for making it the rule of the Court. The appellant, on receipt of the summons of the suit, resisted it on several grounds.
4. It was contended that the appellant never entered into the contract as alleged by the respondent.
5. He did not sign the agreement. It was then asserted that he did not receive any notice of the arbitration proceedings and came to know of the same only on receipt of the summons from Court. His further case was that assuming that the Registrar had sent a notice to the appellant on the 12th October 1957, the award had been made beyond four months as the date on which the said notice was sent must be deemed to be the date on which the arbitrators had entered upon the reference within the meaning of clause 3 of the First Schedule to the Arbitration Act.
6. Alternatively it -o as urged that if the said notice was not considered as a notice by the Arbitrators the award was made without any notice to the appellant.
7. The trial Court found that the contention of the appellant that he had not entered into the contract could not be gone into under section 33 of the Arbitration Act in the proceedings before him and the only remedy of the appellant was to bring a regular suit to set aside the contract. It was then found that the notices of the arbitration proceedings had been served upon the appellant and therefore there was no legal misconduct on the part of the Arbitrators. With regard to the objection based on clause (3) of the First Schedule to the Arbitration Act the learned Subordinate Judge accepted the contention of the appellant that the award had been made after four months from the date of entering upon reference as the notice by the Registrar must have been issued on the strength of the power delegated to him. Nevertheless this finding was not given effect to as this objection did not find place in the petition of objection filed by the appellant and was raised after the period for filing objection namely one month from the date of service of notice had expired. In view of the above conclusions a decree in terms of the award was passed.
8. On appeal, the learned Judges of the High Court, took the view that the earliest date on which the arbitrators could be said to have entered upon the reference was the 11th December 1957, the date on which they were appointed and therefore the award bad not been made beyond four months of entering upon the reference as contemplated by clause (3) of the First Schedule to the Arbitration Act. Dealing with the alternative argument that if the notice by the Registrar was not a notice on behalf of the arbitrators then the award had been made without any notice, the learned Judges relying on the decision reported as A-f/s. M. P. A.I Mia & Sons v. M/s. Green & White Limited (PLD 1964 Dacca 527), came to the conclusion that the act of calling for the statement by the Registrar before the appointment of the arbitrators was at the most an irregularity which did not vitiate the award. They agreed with the view of the trial Court that the appellant could not challenge the existence of the contract in the proceedings in question and his remedy lay in filing a suit. The finding with regard to the service of notice was affirmed.
9. Leave to appeal was granted in this case to consider three points. The first two points, namely, that the arbitrators had entered upon reference on the date the Registrar was alleged to have issued the notice to the appellant calling upon him to file his statement to the claim of the respondent and alternatively that if the same notice was not by the arbitrators the award was void as the appellant was not served with any notice by the arbitrators, have been considered in Civil Appeal No. 8-D of 1967 which was also between the present parties. We have held against the appellant on a consideration of the relevant law on the subject and the judgment in that appeal should be read as a part of the judgment in this appeal in regard to these two points. The only other point that remains to be considered is whether the findings of the Courts below that the existence of the arbitration agreement could not be challenged otherwise than by a suit and the construction put on section 33 of the Arbitration Act in this regard are correct.
10. Mr. Asrarul Hussain, the learned counsel for the appellant, has argued that the learned Judges of the High Court are wrong in holding that the appellant was not entitled to question the existence of the arbitration agreement in the proceedings for making the award a rule of the Court. Section 33 of the Arbitration Act provides that any party to an arbitration agree--ment or any person claiming under him desiring to challenge the existence or validity of an arbitration agreement or an award or to have the effect of either determined shall apply to the Court and the Court shall decide the question on affidavits. The proviso to the section lays down that where the Court deems it just and expedient, it may set down the application for hearing on other evidence also and it may pass such orders for discovery and particulars as it may do in a suit. Section 32 of the Act bars a suit "on any ground whatsoever for a decision upon the existence, effect or validity of an arbitration agreement or award". This section also says that an arbitration agree--ment or an award shall nor be set aside, amended, modified or in any way affected otherwise than as provided in the Act.
11. The provisions referred to above clearly permit a party to an arbitration agreement to challenge the existence of such an agreement by filing an application under section 33 of the Act. Section 32 bars a suit to obtain such a relief. Two questions, therefore, fall for determination. It is firstly to be seen whether, the appellant who denied to have signed the contract which contained the arbitration clause could file an application under section 33 of the Act. The other point which needs considera--petition is whether in the absence of an independent application under section 33 the existence of the agreement could be challenged by way of defence to the acceptance of the award by the Court for the passing of a decree to terms of it. The fact that the appellant denied to have signed the contract will not disentitle him to challenge it under section 33 as the words "any party to an arbitration agreement" in that section include a party who is alleged to be a party to an agreement, but who challenges the existence thereof.
12. "The part of section 33 of the Arbitration Act, -relevant for our purpose, lays down that any party to an arbitration agreement desiring to challenge the existence or validity of an arbitration agreement or to have its effect determined shall apply to the Court and the Court shall decide the question. It will thus be clear that section 33 contemplates an applica--petition for three purposes, namely, (i) when it is desired to challenge the existence of an arbitration agreement, (ii) when it is desired to challenge its validity and (iii) when it is desired to have its effect determined. An arbitration agree--ment may come into existence in one of two ways ; it may either arise out of an agreement which contains nothing else besides the arbitration agreement, or it may arise out of a term contained in a contract which deals with various other matters relating to the contract, which is the present case. Where one is dealing with an arbitration agreement of the second kind, section 33 is concerned only with the term relating to arbitration in the contract and not with the other terms of the contract which do not arise for consideration on an application under that section."
13. We respectfully agree with the above observations. The only point that could be raised by the appellant under section 33 was whether the clause relating to the arbitration agreement existed.
14. Section 33 of the Act has nothing to do with the other terms of the contract which the appellant is said to have signed. It is true that the case of the appellant is that he never signed the agreement in question which contained the arbitration clause. Nonetheless his right to challenge the term relating to arbitration cannot be denied in view of the language of section 33 of the Arbitration Act.
15. The Arbitration Act of 1940 is a consolidating and an amending Act and is a complete Code in itself relating to arbitration save what is mentioned in section 47. The learned Judges of the High Court in holding that the remedy of the appellant lay in filing a suit when he challenged the existence of the contract itself have relied upon the decision of the Indian Supreme Court, reported in A I ft 1959 SC 1357 to which reference has already been made by me. I have found no observation in that judgment which lends support to such a conclusion. The challenge of the appellant, of course, has to remain confined to the arbitration clause in the agreement but in challenging the same I do not find any reason why he could not show that he had not signed the agreement and therefore the arbitration clause was non--existent. The view that I have taken finds support from the following observation made by Gajandragadkar, J., in the case reported as fawahar Lai Barman v. Union of India (AIR 1962 SC 378)
16. "Even if it is held that there is inherent jurisdiction in the Court to entertain an application in support of the existence of an arbitration agreement the question still remains whether an application can be made under such inherent jurisdiction for a declaration that the contract which includes the arbitration agreement .As defined by section 2(a) includes cases where the arbitration is made a part of the contract itself. The argument is that though an application may be made under the inherent jurisdiction of the Court to obtain a declaration about the existence of validity of an arbitration agreement, no such application can be made to obtain a declaration about the existence or validity of the main contract itself. In dealing with this argument it would be necessary to have regard to the substance rather than the form of the matter. In the present case the respondent claims that there is a concluded contract between the parties and that the said contract contained a valid arbitration agreement. Looking at the substance of the matter the prayer was first in regard to the existence and the validity of the main contract leading up to the second and principal prayer that there was a valid arbitration agreement. Quite clearly the decision of this question cannot depend merely on the words used in the petition. Where the challenge to the contract made by the appellant in defence to the claim of the respondent is a challenge common to both the contract and the arbitration agreement, the petition, like the one made by the respondent, must in substance be held to be a petition for a declaration as to the existence of a valid arbitration agreement; and a suit to obtain such a declaration is clearly barred by section 32. Therefore, in our opinion, the fact that an incidental declaration is claimed about the existence and validity of the main contract does not affect the essential character of the application. It is an application for obtaining a declaration about the existence and validity of an arbitration agreement."
17. The declaration prayed for by the appellant that he had not executed the contract in question included the declaration that the arbitration agreement did not exist. A suit filed for such a declaration would be clearly hit by section 32 of the Act as the prayer for declaring the non- existence of the arbitration agreement cannot be made in a suit in view of the words "on any ground whatsoever", used in that section.
18. The learned counsel for the respondent in supporting the view of the Courts below that the remedy of the appellant lay in a suit when he challenged the existence of the contract itself which contained the arbitration clause has relied upon the decision of the Calcutta High Court in the case of The State of Bombay v. Adamjee & Hajee Dawood & Company (AIR 1951 Cal. 147). In this case Harries, C. J. Has observed that sections 32 and 33 on their true construction do not purport to deal with suits for declarations that there never was a contract or that a contract is void. The sections must be confined to attacks on arbitration agreements and awards and the fact that an arbitration agree--ment may fall with the contract does not prevent the Court declaring in a properly constituted suit that there never was a contract at all or that the contract is void and of no effect. This case was considered by the Supreme Court of India in the case reported in AIR 1962 SC 378 to which reference has been made earlier. This decision of the Calcutta High Court was overruled and the view taken by the Bombay High Court that a petition filed for a declaration that the respondents had entered into the contract which contained an arbitration clause was entertainable under the inherent jurisdiction of the Court in view of section 32 of the Act was approved.
19. The learned counsel for the respondent has then contended that as the petition of objection filed by the appellant was not -supported by an affidavit it was not maintainable in view of the terms of that section. There is no substance also in this contention. Section 33, no doubt, lays down that any question raised under that section shall be decided on affidavits but that) does not mean that if the application is not supported by an, affidavit it cannot be entertained. The provision with regard to affidavits relates to the mode of receiving evidence. The proviso to that section clearly empowers the Court to determine an application under section 33 "on other evidence also".
20. The only other question that remains to be considered is whether in the absence of an independent application filed under section 33 of the Act the present question could be raised in the suit filed for making the award the rule of the Court. Section 17 of the Act lays down that 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. Section 30 enumerates the grounds for setting aside an award.
21. The section reads as follows:-- "An award shall not be set aside except one or more of the following grounds, namely--
(a) that an arbitrator or umpire has mis-conducted himself or the proceedings;
(b) that an award has been made after the issue of an order by the Court superseding the arbitration or after arbitration proceedings have become invalid under section 35;
(c) that an award has been improperly procured or is otherwise invalid."
22. The appellant in the present case wants the award to be set aside on the ground that he did not execute the agreement which contained the arbitration clause. His case is that there was no valid reference. In my view such a relief comes within the purview of the expression "otherwise invalid" occurring in clause (c) of section 30. Section 30 does not lay down any procedure. Section 33, no doubt, uses the word "challenge" as compared to the words "set aside" in section 30 but that in my view does not make any difference. Section 33 says also that when the existence of the agreement is challenged "the Court shall decide the question". These words read with the word "challenge" clearly empower the Court to set aside the agreement. In setting aside the agreement, after an award has been made on its basis, the Court sets aside the award also and such a power is referable to section 30 in view of the expression "otherwise invalid" containedin clause (c) of section 30. According to me, therefore, since the agreement in question was challenged by the appellant after the award had been made there was no bar for him to do so in the present suit. The view of the Courts below that such a relief could be had only by a suit is, therefore, wrong. In the result the judgments and decrees of the Courts below are set aside. The case is remitted to the trial Court to determine whether the appellant had executed the contract. Costs will abide the result.
23. HAMOODUR RAHMAN, C. J.----I agree.
24. MUHAMMAD YAQUB ALI, J.---I agree.
25. SAJJAD AHMAD, J.----I agree.
26. M. R. KHAN, J.----I agree.