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Judgment
A. Varadarajan, J.—The second respondent was employed under the appellant, the Management of Sayani Talkies, and a dispute arose
about his non-employment before the Conciliation Officer, Labour Officer-I, Madras. The appellant and the second respondent entered into a
settlement u/s 12 (3) of the Industrial Disputes Act, 1947, on 28th September, 1968 agreeing to refer the dispute to the arbitration of the
Commissioner of Labour, Madras, or his nominee. The Commissioner of Labour nominated the first respondent, Deputy Commissioner of Labour,
evidently as persona designata, to arbitrate, and he obtained statements from the appellant and the second respondent, recorded evidence, heard
them and found that the non-employment of the second respondent; was not justified and that he was entitled to reinstatement with continuity of
service and half back wages. Accordingly, he passed an award on 12th May, 1969. These facts are admitted in the appellant''s affidavit filed in
support of the petition filed by the appellant u/s 14 (2) of the Arbitration Act, 1940 (hereinafter referred to as the Act) for filing the award into the
Court. The lower Court allowed that petition,
The appellant filed another petition u/s 30 of the Act for setting aside the said award, dated 12th May, 1969 on the following grounds:
(a) The Arbitrator has misconducted himself and the proceedings are vitiated by an error of law apparent on the face of the record.
(b) The Arbitrator failed to appreciate that the arbitration was governed by the Arbitration Act and as such his powers were not larger than those
of the civil Court in trying a civil suit ;
(c) The Arbitrator failed to note that it was beyond the scope of his jurisdiction to direct reinstatement of the second respondent as it would
amount to enforcement of a contract of personal service which is prohibited by Section 14 of the Specific Relief Act.
(d) The Arbitrator should have referred to the enquiry proceedings and should have given a finding as to whether the enquiry was fair and
reasonable.
(e) The Arbitrator misdirected himself in going into the evidence led before him before giving a finding as to the fairness of the enquiry.
(f) The Arbitrator exceeded his jurisdiction in re-assessing the evidence placed at the enquiry proceedings.
(g) The Arbitrator grievously erred in law in submitting his judgment for that of the enquiry officer, when there was an enquiry into the charge of
misconduct in which the charge had been made out beyond any shadow of doubt.
(h) The Arbitrator has not given any reason to discard the domestic enquiry officer''s findings and in the absence of such a finding he ought not to
have proceeded to assess the evidence before him with a view to find the guilt of the workman ;
(i) The approach of the Arbitrator in going into the merits of the case was contrary to law.
(j) The Arbitrator should have seen that even if the non-employment was found to be unjustified the only relief to which the second respondent
would be entitled was only damages and not reinstatement in service.
The second respondent, who alone contested that petition u/s 30 of the Act, contended in his counter statement that the grounds alleged for
setting aside the award are not true, and stated that the first respondent reached his conclusion expressed in the award only after considering all the
records and evidence placed before him and that his award is valid and cannot be set aside. He contended in the counter-statement filed in the said
application u/s 14 (2) of the Act that the parties to the arbitration proceedings have agreed to treat the award of the arbitrator as final and binding
on them, that the settlement by way of the award is binding on all parties u/s 18 (3) of the Industrial Disputes Act, and that the Settlement arrived at
on 28th September, 1968 u/s 12 (3) of the Act for referring the matter to arbitration is not an arbitration agreement as defined in Section 2 (a) of
the Act as alleged in that petition, but is a settlement u/s 12 (3) of the Industrial Disputes Act, the scheme and the provisions of that Act being to
exclude the jurisdiction of the civil Court. He thus contended that it is not open to the appellant to invoke the jurisdiction of the civil Court u/s 14
(2) of the Act. He further contended that even if in fact there was an arbitration, Section 10A of the Industrial Disputes Act would be attracted,
and Sub-section (5) of that section says that nothing in the Arbitration Act, 1940 shall apply to arbitrations u/s 10A and that, therefore, the civil
Court has no jurisdiction to entertain the petition.
The paints referred for arbitration according to the settlement reached, by the parties on 28th September, 1968 are:
Whether the non-employment of the second respondent is justified and if not, to what relief he will be entitled?
To compute the relief in terms of money if it could be so computed.
It is seen from the lower Court''s order that the parties to the industrial disputes were properly represented before the Labour Officer and they
signed the said settlement Exhibit B-1, dated 28th September, 1968 agreeing to refer those issues to the informal arbitration of the Commissioner
of Labour, Madras or his nominee. The Commissioner of Labour nominated the first respondent, who recorded evidence and admittedly heard the
parties and gave a finding that the non-employment of the second respondent was not justified and that he should be reinstated with continuity of
service and half back wages as mentioned above. The lower Court held that the first respondent has not functioned as a civil Court in giving the
award and is not governed solely by the Arbitration Act and that the appellant having agreed to abide by his decision cannot resile and contend the
first respondent had no jurisdiction to pass the award and that the award is not valid. In that view he dismissed the petition lender Section 30 of the
Act. Though several grounds had been urged in the petition filed u/s 36 of the Act for setting aside the award, only two grounds, namely:
(1) the arbitrator failed to appreciate that the arbitration was governed by the Arbitration Act and as such his powers were not larger than those of
the civil Court in trying a civil suit ; and
(2) The arbitrator failed to note that it was beyond the scope of his jurisdiction to direct reinstatement of the second respondent as it would amount
to enforcement of a contract of personal service which is prohibited by Section 14 of the Specific Relief Act ;
were urged before the lower Court. Only those grounds were urged by the learned Counsel for the appellant even before me.
There can be no doubt that the civil Court has no jurisdiction to enforce a contract of personal service and that it could award only damages for
breach of any such contract. In Executive Committee, U.P. Warehousing Corporation Vs. Chandra Kiran Tyagi, which was strongly relied upon,
by the learned Counsel for the appellant, it is observed that normally a contract of personal service will not be enforced by an order for specific
performance and that it would not be open for a servant to refuse to accept the repudiation of a contract of service by his master and say that the
contract has never been terminated. In that case, a civil suit was instituted challenging the dismissal of an employee, who prayed for a declaration
that the order of dismissal was null and void and that he is entitled to be reinstated in service. It has been held that the civil Court has no jurisdiction
to grant the relief of reinstatement. Having regard to this decision, the learned Counsel for the appellant contended that as the civil Court cannot
give the relief of reinstatement to the second respondent, it was not open to the first respondent to pass an award giving the relief of reinstatement
to the second respondent and that the award is, therefore, not valid. This decision does not help the learned Counsel for the appellant as it does
not lay down that it is not open to an arbitrator appointed in pursuance of a settlement u/s 12 (3) of the Industrial Disputes Act, to pass an award
directing reinstatement of an employee even though the reference made to him was to consider whether the non-employment of that employee was
justified. The learned Counsel for the appellant relied also upon the decision in Hospital Equipments (Manufacturing) Company v. Labour Court,
Madras (1972) 42 F.J.R. 347, where it is observed at pages 362 and 363 thus:
The first question to be considered is whether there was an existing right in favour of the workmen so as to entitle them to apply u/s 33-C (2) for
the purpose of computation of any benefit. In other words, the question is whether the decision of the Deputy Commissioner on the basis of which
the claims were made by the workmen created any right in their favour and cast an obligation upon the management. That leads to the question
whether the decision of the Deputy Commissioner is an enforceable settlement or an enforceable award under the Industrial Disputes Act. Though
the matter was taken up by the Conciliation Officer, who was competent to bring about a settlement u/s 12 (3), he merely got an agreement from
the parties for referring the dispute to the decision of the Commissioner or his nominee. In the settlement the parties no doubt agreed that the
decision of the arbitrator shall be binding and shall be treated as a term of the settlement for all purposes. The binding character of the settlement
for the purpose of Section 12 (3) of the Industrial Disputes Act, cannot be extended further to imply that the award made in pursuance of the
settlement will be binding or that such an award cannot be impugned on any of the grounds which could be urged by the parties to the reference to
the arbitration under the provisions of the Arbitration Act. Section 10A provides for voluntary reference of dispute for arbitration. Under this
provision it is open to the employer and the workmen to agree to refer any dispute to arbitration. This should be by a written agreement, which
should be in the prescribed form and should be signed by the parties in the prescribed manner. A copy of the Arbitration agreement should be
forwarded to the appropriate Government and the Conciliation Officer. Thereupon, the appropriate Government should, within a month from the
date of the receipt of such copy, publish the same in the official gazette. If all these formalities are complied with, then the provisions of the
Arbitration Act, 1940, would not apply to such arbitration. That is expressly provided for in Sub-section (5) of Section 10A. In the instant case,
though the parties agreed to have their dispute decided by the Commissioner of Labour or his nominee the other formalities of Section 10A were
not complied with, with the result the decision given by the arbitrator is not saved by Sub-section (5) of Section 10A. In other words, the said
decision is subject to the provisions of the Arbitration Act.
If the decision of an arbitrator is subject to the provisions of the Arbitration Act, the question is, does the decision become enforceable merely
as a decision given under reference by the parties or does its enforceability depend upon the compliance of any legal formality? Chapter V of the
Arbitration Act applies generally to all arbitration except otherwise provided in that Act.
It is further observed at pages 356 and 357:
If the award had been filed and if notice of the filing of the award had been given to the management, it was open to the management to take such
action as may be available to have the award set aside or modified. Until an award is filed into Court, it is not open to any party to apply u/s 30 of
the Arbitration Act to have it set aside. The Union in question was a party to the petition filed by the management u/s 14 (2) of the Act. The Union
should have known that the arbitrator had failed to file the award and that, therefore, until the award was filed into Court, it could not be enforced.
The Union is not entitled to throw any blame upon the management for not taking action to impugn the award. Nothing prevented the Union from
taking such action as was available in law to see that the award was filed in time and notice given to the management. The fact that long time has
elapsed since the award was passed is no ground for holding that the award is enforceable, though it has not been made a decree of Court....
It would appear from this decision that the award cannot be enforced until it has been made a decree of Court. This decision also would not help
the learned Counsel for the appellant.
In Hanskumar Kishanchand Vs. The Union of India (UOI), it is observed at page 606:
It is true that under the law the Courts have the authority to set aside the awards made by arbitrators on certain grounds such as that they are on
matters not referred to arbitration, or that the arbitrators had misconducted themselves, or that there are errors apparent on the face of the award.
But where the award is not open to any such objection, the Court has to pass a decree in terms of the award, and u/s 17 of the Arbitration Act, an
appeal lies against such a decree only on the ground that it is in excess of or not otherwise in accordance with the award. In other words, it is the
decision of the arbitrator where it is not set aside that operates as the real adjudication binding on the parties, and it is with a view to its
enforcement that the Court is authorised to pass a decree in terms thereof. There is thus a sharp distinction between, a decision which is
pronounced by a Court in a cause which it hears on the merits, and one which is given by it in a proceeding for the filing of an award. The former is
a judgment, decree or order rendered in the exercise of its normal jurisdiction as a civil Court, and that is appealable under the general law....The
latter is an adjudication of a private Tribunal with the imprimatur of the Court stamped on it, and to the extent that the award is within the terms of
the reference, it is final and not appealable.
In that case, the reference to the District Judge, Khandwa, was as arbitrator u/s 19 (1) (V) of the Defence of India Act, 1939, of a dispute as
to compensation for requisitioned property. In Alopi Parshad and Sons Ltd. Vs. Union of India (UOI), , it is observed thus at page 50:
The extent of the jurisdiction of the Court to set aside an award on the ground of an error in making the award is well defined. The award of an
arbitrator may be set aside on the ground of an error on the face thereof only when in the award or in any document incorporated with it, as for in-
instance, a note appended by the arbitrators, stating the reasons for his decision, there is found some legal proposition which is the basis of the
award and which is erroneous.
It would appear from this decision that the civil Court is bound to pass a decree in terms of the award filed into Court u/s 14 (2) of the Act, if the
award is not vitiated by any of the grounds mentioned in Section 30 of the Act. The appellant in this case has not established any of the grounds
mentioned in Section 30 to show that the award is not acceptable. As observed by the lower Court, the first respondent functioned as arbitrator in
an industrial dispute as persona designata and not as a civil Court. He was entitled to pass an award for reinstatement, and if that award is not set
aside for any of the reasons mentioned in Section 36 of the Act, after it is filed into Court, a decree in terms of the award has to follow. Therefore,
I am of the opinion that the petition was rightly rejected by the lower Court. The appeal fails and is dismissed with costs of the second respondent.