CASE NAME	Bahadur Singh v. Fuleshwar Singh, 1968 SCC OnLine Pat 32
CITATION	AIR 1969 Pat 114
COURT	Patna High Court
BENCH	Hon’ble Justice  Anwar Ahmad and Justice Shambhu Prasad Singh
APPELLANT	Bahadur Singh
RESPONDENT	Fuleshwar Singh and Others
DECIDED ON	12 July 1968

 

INTRODUCTION

The main piece of legislation governing agreements and contracts in the Indian Subcontinent is the Indian Contract Act of 1872. It is also among the oldest laws the British administration passed in India. The Act outlines and validates agreements or contracts between different parties and offers principles for creating a legally binding contract. The statute, which covers all of India, including Jammu and Kashmir, went into effect on September 1st, 1872.​

The significance of a contract being certain in nature is explained in Section 29. Although the implicit intention or terms are a different matter, it is also imperative that the terms be clear from the outset.​ The decision should be made in a way that ensures the contract is legally binding. The court was not allowed to issue a decree that would not be enforceable in cases where a piece of a larger area of land was agreed to be sold without the area or borders being specified, and the conditions pertaining to description were ambiguous and unclear.​

The contract may not be deemed liable as uncertain in situations where it appears doubtful, but reasonableness can be applied. In other words, the contract is not deemed doubtful if nothing is indicated in its term,s and the law can step in to fill the void. For instance, if a third party sets the price, there is no room for doubt in the agreement because section 9(2) of the Sale of Goods Act of 1930 will be followed, and a reasonable price will be paid.​

FACTS OF THE CASE

The plaintiff’s lawsuit states that he and defendant No. 1 formed a partnership firm, wherein the plaintiff was required to provide the capital and hold eleven annas of the business, while defendant No. 1 was to hold five annas. They opened a stationery store in the town of Saharsa in August 1959. A disagreement arose between them in November 1961, and on December 5, 1961, they decided to have the case arbitrated by four arbitrators who were named as defendants 2 through 5 in the lawsuit. The complaint claimed that Manzar Alam, one of them, was supposed to serve as the umpire. They executed two documents. The award seems to have been rendered and signed by the arbitrators on April 3, 1962. On April 4, 1962, it was rewritten on stamped paper, and on April 5, 1962, it was registered. On April 7, 1962, the plaintiff received notification of the award. Two additional people were added to the lawsuit as defendants 6 and 7, who the plaintiff claimed were only his benamidars and had nothing to do with the company.​

On June 16, 1962, defendant No. 1 showed up in court following the service of the notice. On May 11, 1963, the award was actually submitted to the court. Defendant No. 1 applied to the court below on June 12, 1963, stating that he wished to view the award, which had been filed and was being held in safe custody. He filed his objection on January 11, 1964, claiming among other things that there was no valid reference because he was forced to sign the agreement for reference under duress, that the arbitrators had wronged themselves, that defendants 6 and 7 had an interest in the partnership and were not merely the plaintiff’s benamidars and that the award could not be enforced because they were not parties to the reference, that the reference was void because it was ambiguous, that the reference was bad because it only applied to a portion of the partnership business and not the canteen business owned by the partners in Sour Bazar in Saharsa, and that the arbitrators were accused of a number of misconducts that need not be mentioned, but three in particular: they failed to consider the damaged shop items and did not assign any value to them; they fixed the value of the other articles with the assistance of outsiders; and they rewrote the award on April 4, 1962, after they had pronounced and signed it the day before. The arbitration was bad because no umpire was actually appointed.​

ISSUES RAISED

• Was the contract executed legally and validly?
• Did the agreement’s terms apply to the issue that was sent to arbitration?
• Was it acceptable to make modifications to an arbitration award after it was announced?
• Could the award be upheld in light of the procedural objections that were raised?

ARGUMENTS FROM BOTH SIDES

Argument from Appellant

• Since defendant No. 1’s (respondent No. 1 before this Court and to be referred to as the respondent hereafter) objection was submitted more than thirty days after the award was filed, it was time-barred. The Court below ought to have taken this into account and issued a decree in accordance with the award.​
• This court’s bench decision in Deep Narain Singh v. Mt. Dhaneshwari, which held that the question of limitation under Article 158 does not arise if the required notice is not served, was relied upon because there could be no question of limitation in this case because no notice was served on the respondent.​

Argument from Respondent

• The limitation issue would only come up in relation to two misconducts: the arbitrators’ failure to consider the shop’s damaged items and their use of outside assistance to determine the value of the remaining items. However, the argument that the award was void due to the ambiguity of the reference and its revision fell outside the purview of Section 30 of the Arbitration Act. It could not be ruled to have been barred by limitation. 
• Since the court below determined that the agreement for reference was ambiguous, its order must be upheld. The lower court’s conclusion that the reference agreement is ambiguous does not satisfy me. The appellant and respondent entered into a partnership business. The business owns a shop called “Variety House” in the town of Saharsa, where the respondent owns five annas shares. The appellant owns the remaining shares, according to the two documents, Exhibits 1 and 1(a), which contain the terms of reference agreed upon. 

JUDGMENT

The Court respectfully agrees with what their Lordships have noted and which has been quoted above, and the law on the subject has been accurately articulated in this decision. When that criteria is applied to the current case’s facts, the arbitrators’ award cannot be overturned due to the arbitrator’s reference being ambiguous. The lower court’s order must be overturned for the above reasons. As a result, the appeal is granted with costs to both the lower court and the plaintiff-appellant in this case. It is directed that a decree be drafted in accordance with the award, which is acknowledged as legitimate.

CONCLUSION

Under the Indian Arbitration Act of 1940, important legal issues are highlighted in the case of Bahadur Singh vs. Fuleshwar Singh. The enforceability and procedural management of arbitration rulings were among the main concerns. The court underlined that stringent statutory rules oversee the arbitration procedure, guaranteeing both the finality of verdicts and procedural integrity. The decision maintained the rule that any changes or additions to an arbitration award must adhere to the law, as doing otherwise may make the award unenforceable.

The ruling also emphasized the need for explicit arbitration agreements, emphasizing that vague terms of reference or procedural errors might impede the process of resolution. It reiterated that courts have little authority to interfere in arbitral procedures without extraordinary circumstances like fraud, blatant illegality, or procedural violations.

Crucially, the case revealed several restrictions in the 1940 Arbitration Act. The Act’s procedural rigor undermined the fundamental goal of arbitration as a quick conflict resolution process, which frequently led to drawn-out litigation. Additionally, the lack of strong protections to handle possible ambiguities in arbitration agreements allowed for judicial interference, which reduced the parties’ independence in settling disagreements.

The case emphasizes how crucial it is to construct arbitration agreements precisely and strictly follow the law. It also illustrates how arbitration regulations must change in order to reduce court meddling and procedural hold-ups. Although the ruling is consistent with the Arbitration Act’s tenets, it draws attention to the 1940 framework’s shortcomings. It opens the door for the more adaptable and contemporary Arbitration and Conciliation Act, 1996.

The objections highlight how crucial it is to balance efficiency and procedural compliance to achieve arbitration’s goal of providing a prompt and efficient remedy.