NARAINDAS versus VALLABHDAS & ORS.

Citation: [1972] 2 S.C.R. 28 · Decided: 15-10-1971 · Supreme Court of India · Bench: K.S. HEGDE · Disposal: Dismissed

Judgment (excerpt)

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 "" arbi-
tration 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 arbitra-
tion and she had not joined the arbitration agreement; (ii) that the refer-
ence 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 allow-
A 
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 ohjec-
G 
tion to the arbitration 
proceedings 
or 
the 
subsequent 
ay.•ard. 
Ac· 
cording to counsel, she died three years ago. In the circumstances the ques-
tion 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 re-
latirt"g to a dispute which is the subject matter of reference without obtain-
ing 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 pend-
ing 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 an

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