This case is fixed today for hearing of objections to the award filed on behalf of the defendant through an application under sections 30 and 33 of the Arbitration Act, 1940 (hereinafter referred to as the Act). It appears that subsequent lo the filing of the objections an application on behalf of defendant was moved under Order VI, rule 17 and section 151, C. P. C. Seeking to drop the prayer under section 33 and for treating the objections under section 30 of the Act. Before considering the objections to the award therefore, it would be necessary to dispose of the latter application for amendment.
2. It appears that when this application came up for hearing the learned counsel for the plaintiff, had raised a preliminary point contending that the objections to the award cannot be entertained without first directing the furnishing of security for the amount payable under the award.
3. Mr. Afzal Nabi, learned counsel appearing for the plaintiff has reiterated his preliminary objection and has urged that under the second proviso of section 33 of the Act added through Law Reforms Ordinance (XII of 1972) an application for challenging the existence or validity of an award cannot be entertained by Court unless the applicant first deposits the amount which be is required to pay under the award or has furnished security to the satisfaction of the Court for doing so. It is his contention that the present application is an attempt to by-pass the provisions of the aforesaid proviso and obtain the setting aside of the award without compliance with the said pre-condition for consideration of the objections. Learned counsel argued that the newly added proviso can not be confined in its operation to section 33 of the Act but has to be read as a part of section 30 of the Act as well. He went on to argue that in fact section 30 merely lays down the grounds upon which it is permissible to set aside the award. But the procedure for making an application for securing the setting aside of the award is provided for in section 33 of the Act. Accordingly he contends that even if the objections initially filed by the defendant are to be entertained the defendant must comply with the condition of furnishing security.
4. Mr. Anis Ahmed, learned counsel for defendant in support of this application on the other hand strenuously argued that the two sections, namely section 30 and section 33 furnish entirely independent right to seek intervention of the Court for matters contained therein. According to him section 33 was intended to apply to a case where the aggrieved party wishes to have the existence or validity of arbitration agreement determined, which matters are outside the scope of section 30 of the Act. According to the contention of the learned counsel the scope of enquiry falling within the purview of section 30 is somewhat limited and confined to the objections to the award and cannot extend over the matters behind the reference like the agreement of arbitration or the reference itself. He therefore, argued that it was open to the defendant to drop his prayer under section 33 and confine the same to section 30. Mr. Anis further submitted that under section 30 the plaintiff cannot be required to deposit the amount awarded or to furnish security, as the proviso to section 33 of the Act is not attracted in that case. Learned counsel further orally prayed that in case the Court comes to the conclusion that the second proviso to section 33 of the Act is applicable to the objections he has submitted, an order for furnishing security may be passed and the defendant allowed to agitate all his objections. He placed reliance on Board of Government Aitchison College, Lahore v. Karam Din Muhammad Ramzan (PLD 1973 Note 158 at p. 238
5. In order to appreciate the contentions of the learned counsel section 33 may be referred to which reads as under :- "33. The arbitration agreement for award to be contested by application.-- Any party to an arbitration agreement or any person claiming under him desiring to challenge the existence or validity of arbitration agreement or an award or to have the effect of either determination shall apply to the Court and the Court shall decide the question on affidavits Provided 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 Provided further that no application challenging the existence or validity of an award, or for having its effect diminished, shall be entertained by the Court unless the applicant has deposited in the Court the amount which he is required to pay under the award or has furnished security to the satisfaction of the Court for the payment of such sum or the fulfilment of any other obligation by him under the award."
Section 30 of the Act on the other hand is captioned as `grounds for setting aside award' and provides that an award shall not be set aside except on one or more of the grounds mentioned therein. One of the grounds mentioned in section 30 is contained in clause (c) which is in the following terms :- "That an award has been improperly procured or is otherwise invalid."
A bare reading of the two sections quite obviously shows that section 30 of the Act was contemplated to lay down the precise limits of the power or jurisdiction of the Court to set aside the award, so that no award could be set aside except on one of the grounds mentioned therein.
However as the caption of section 33 shows, that section provides for the procedure for contesting the arbitration agreement or award by an application and lays down that an aggrieved party to arbitration agreement may apply to the Court for contesting the agreement or the award as the case may be.
6. Now reading the language of the second proviso the obvious intention) of the Legislature was to attach a condition of deposit or security to the entertainment of application for challenging the award. So that no part A is allowed to offer frivolous challenge to the existence or validity of an award without establishing his bona fides by making the required deposit or furnishing the security. After the arbitrator has made his award in an arbitration without intervention of the Court, the award is filed under section 14 of the Act. The Court has then to give notice to the parties of the filing of the award. It is then for any of the parties to the arbitration agreement to move the Court for setting aside the award. After hearing such party the Court has to proceed according to the procedure provided in section 17 of the Act which reads as under :- "Where the Court sees no cause to remit the award or any of the matters referred to arbitration for consideration 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 according to the award, and upon the judgment so pronounced a decree shall follow, and no appeal shall lie from such decree except on ground that it is in excess of, or not otherwise in accordance with, the award."
The perusal of the above section shows that the Court can make the award the rule of the Court in case an application to set aside the award has been made within the period of limitation or such application has been made and has been refused. Now the only section governing the procedure for making an application for setting aside of the award in the Act is section 33, for the disposal of which the limits of the jurisdiction of the Court are prescribed in section 30. Section 33 of the Act is wider in scope in so far as it deals with the question of existence or validity of the arbitration agreement, which may be raised by a party before the award is made or filed in Court. While interpreting section 33 it was observed in the Province of West Pakistan v. Fakir Spinning Mills Ltd.
(PLD 1962 Kar 386) as under :- "There can obviously be cases where, without an award having been made, a party wishes to dispute the validity or existence of an arbitration agreement. But once the award has been given then it is the award which must be challenged. There may be of course cases where a party against whom the award has been made, but not filed in Court wishes to challenge the validity of a purported arbitration agreement in order to prevent any further proceedings in arbitration upon other matters. But in the present case although there is a prayer for a declaration that there was no valid agreement, or reference for appointment of respondent No. 2 as an arbitrator or sole arbitrator to decide the matters mentioned in the award, it is clear that this prayer is made in connection with the disputed award."
7. For the above reasons I have come to the conclusion that section 33 of the Act is a procedural provision so far as proceedings for setting aside the award are concerned and therefore it was only appropriate to effect an amendment of that section for the purpose of attaching the condi-- petition to the entertainment of an application for setting aside the award. If the interpretation sought to be placed by the learned counsel for the s defendant is accepted and even if his contention that section 33 furnishes additional grounds for setting aside the award is accepted, the result will be very irrational in so far as the proviso in question would then apply only in a limited class of cases where a party seeks to have the award set aside and not to other cases where the relief sought is set aside. This, to my mind could not have been the intention of the Legislature as there it no basis for differentiation between such cases. I, therefore. Hold that section 30 and section 33 of the Act are to be read together and the proviso is attracted to both these sections. In this regard it is pertinent to refer to the observations in Nanak Chand and others v. Laid Panna Lal (AIR 1963 All. 68which are as under :- "The counsel for the respondent contended that under section 33 of the Arbitration Act of 1940 when an application is made by any party challenging the validity of an award the Court shall decide the question and it implies that the Court has ample power to set aside the award on any ground other than mentioned in section 30 of the Act and the power and jurisdiction of the Court is not necessarily confined to the grounds, mentioned in the latter section. In effect the learned counsel's arguments is that the power and jurisdiction of the Court under section 33 of the Act is not controlled by the provisions of section 30 of the Act. I do not see any force in the contention of the learned counsel of respondent.
To my mind section 33 relates to the procedure which is to be adopted for getting the award set aside while section 30 confines the power or jurisdiction of the Court to which an application is made for setting aside the award to the' grounds mentioned in that section. The two sections have to be read together and if what is contended by the learned counsel for respondent is correct, the imperative language of section 30 of the Act that an award shall not be set aside except on one or more of the grounds mentioned in section 30 would lose all forces and the object of the provision would be defeated as it will extend the power of the Court to set aside the award on any ground other than those mentioned in section 30 of the Act."
8 - In the result, I dismiss the application and direct that the defendant shall furnish a bank guarantee for the sum required to be paid by him in the award within one month of this date and in case of his failure to do so the office will put up the case for further orders.