BIDHICHAND Vs. DARSHANLAL
HIGH COURT OF MADHYA PRADESH
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Dixit, J. -
(1.) THE facts of this appeal are that the Respondent Darshanlal filed a suit on his be - half and on behalf of his minor sons against his father Bidhichand, his brother Ramjidas and the minors of Ramjidas for partition of joint family property. During the pendency of the suit on 21 -10 -1948 Darshanlal, Ramjidas and Bidhichand agreed in writing to refer their dispute to five named persons.
Soon after this agreement was concluded and on 21 -10 -1948 itself the majority of the named 'panchas' proposed to the parties that the joint famify property should be divided into three shares; that whatever movable property consisting of cash, ornaments and other articles was ira possession en Bidhichand should remain in his possessioiyfn lieu of his one -third share in the jomt family Efroperty; that Ramjidas and Darshanlal ould/have no share in this movable property iidhichand would have no share in the im -le property; that Ramjidas and Darshanlal retain possession of whatever movable propety they held; that the immovable property would be divided equally between Darsh nlal and Ramjidas and that the parties would accept the division of immovable property that might be made by the 'panchas'.
Darshanlal, Bidhichand and Ramjidas all signified their consent in writing to the acceptance of these proposals. Immediately thereafter the 'panchas' proceeded to make a division of the immovable property and specified the property that should bo taken by each of the brOrs. Ramjidas and Darshanlal. The parties accepted in writing this division also. The Plaintiff then moved the trial Court for a decree in terms of the compromise arrived at between the parties. Bidhichand and Ramjidas opposed the Plaintiff's prayer for the passing of a compromise decree saying that the reference to arbitration was against law; that they did not realize the full implications of the proceedings held by the 'panchas' and were thus misled when they accepted the proposals made by the 'panchas'; and that the 'Panchas' wore guilty of misconduct.
Bidhichand also added that he did not nominate any 'Panchas'; that the 'panchas' did not take down the statement of any party and fully investigate the matter. The learned District Judge after recording the evidence of the parties as to the circumstances in which they referred their dispute to the 'Panchas' and accepted their decision, came to the conclusion on that evidence that there was an adjustment in the suit under Order 23 Rule 3. Code of Civil Procedure He accordingly recorded the compromise, arrived at between the parties and passed a decree in accordance therewith. Bidhichand and Ramjidas have now appealed to this Court.
(2.) MR . Ravidutta Sharma learned Counsel appearing on behalf of the Appellants first urged that the parties agreed to refer their dispute to arbitration without any order of reference by the Court: that an award obtained in such arbitration was invalid and illegal and could not be enforced as an award or a compromise under Order 23,Rule 3.
Learned Counsel placed reliance on 'Jugaldas Damodar Modi and Co. v. Pursottam Umed -bhai and Co.' : AIR 1953 Cal. 690(A). Li reply Mr. Ashthana relying upon Chanbasappa v. Bas -lingayya' : AIR 1927 Bom. 565(B), 'Arumuga Mudaliar v. Balusubramania Mudaliar' : AIR 1945 Mad 294 (C), and 'Dular Koeri v. Prayag Koeri' : AIR 1942 All 145 (FB) (D) said that an award made during the pendency of a suit between the parties could constitute an adjustment by lawful agreement or compromise within the meaning of Order 23 Rule 3 and could be recorded as such.
I do not think that the question whether where in a suit, parties have referred their differences to arbitration without an order of the Court and an award is made, a decree in terms of the award could be passed by the Court under Order 23 Rule 3 really arises in this case. It is important to note that in the present case the parties no doubt referred their dispute to certain named persons without any order of the Court. But when the panchas' made their proposals and gave their decision as to the allotment of shai es to the parties, the parties themselves accepted the recommendations of the panchas' and agreed to treat the award as an agreement or compromise of their claims.
Each of the parties put down their signatures to the award made by tha 'panchas' and expressed their acceptance of it by making the endorsement QSlyk eatwj gSa A Now there is a material distinction between an award made by the arbitrators and subsequent, agreement between the parties accepting the awaid. The precise question that therefore arises in this case is not whether an award made in a private arbitration during the pendency of the suit can be treated as an agreement for compromise and on that basis a decree can be passed in terms of the award. But it is whether a distinct and subsequent agreement between the parties accepting the award is enforceable as a compromise under Order 23 Rule 3.
Before the enactment of the Arbitration Act 1940 which repealed Section 89, Code of Civil Procedure and the second Schedule of the Code there was no doubt some conflict of opinion on the question whether where in a suit, parties have referred their difference to arbitration without any order of the Court and an award is made, a decree on the basis of the award could be passed under Order 23 Rule 3. The conflict has been noted in Note 9 to Order 23 Rule 3 in 'Chitaley's Code of Civil Procedure . Vol, 2 and it has been observed therein:
Much, of the. above discussion is now of mere academic interest in view of the facts that, Section 89 and the Second Schedule of the Code have been repealed by the Arbitration Act of 1940 and ' that Section 47 of that Act which replaces Section 89 of the Code makes the position clear by expressly providing as to when an arbitration award may be taken into consideration as a compromise or adjustment of a suit. But even after 'he passing of , the Arbitration Act there appears to be some conflict of opinion on the question.
I offer no opinion on the correctness of cases decided after the coming into force of the Arbitration Act in which it has. been held that an arbitration award made in circumstances such as there referred to above could not be taken into consideration as a compromise or adjustment of a suit. As I have said before the point does not arise in the instant case. On the question whether if subsequent to the award the parties agreed to accept the award and treated it as a compromise of their claims, a decree could be passed under Order 23 Rule 3 on the basis of that agreement, there is no conflict of opinion.
It is difficult to see on what ground such a subsequent agreement accepting the award could be ruled out of consideration as a compromise for purposes of Order 23, Rule 3. The law does not prescribe any particular method as to the manner in which parties should settle their differences. It is open to them to have a direct settlement between themselves. They may also prefer to ask certain persons to suggest proper terms of settlement and when those terms are suggested, they may agree to adopt and abide by those terms.
The agreement in such a case would be no less a compromise than if the terms are fixed by direct settlement by the parties themselves and would be enforceable as a compromise under Order 23 Rule 3. There is ample authority to support this view. In 'Alagappa Chettyar v. Chettyar Firm'., AIR 1937 Rang. 287 (E), Dunkley J. observed as follows:
It is open to the parties to a suit to adopt any method they please for the purpose of coming to an agreement in settlement of their disputes. If they choose to adopt the method of asking certain persons to decide what are fair and proper terms of settlement (without informing the Court of the action) and those persons decide on certain terms, and the parties themselves mutually agree to adopt and be bound by those terms as a basis of settlement then the parties have concluded a lawful agreement in adjustment of the suit, within the meaning of Order 23 Rule 3, Code of Civil Procedure just as much as if they had arrived at those terms after direct negotiation between themselves, it matters not whether the decision of the persons called in to settle the terms is valid in law as an award.
(3.) IN 'Nihal Singh v. Ashtabakar', AIR 1930 Lah 860 (F), Dalip Singh J., held that an award which has been accepted by the parties can and should be considered to be a compromise, for the parties agree to abide by the terms of the award and that if the award is signed by the parties, it becomes a compromise and is binding on them. In ' : AIR 1953 Cal 690(A)', cited by the learned Counsel for the Appellant also a distinction was made between the enforcement of an award and the enforcement of a distinct and subsequent agreement to abide by the award and it was pointed out that such a subsequent agreement is always enforceable as a compromise under Order 23 Rule 3.
It may be mentioned that in ' : AIR 1927 Bom. 565 (FB) (B),' the learned Judges expressly stated that in that case no point arose as to whether if subsequent to the award the parties agree to treat the award as an agreement or compromise of their claims, a decree could be passed under Order 23 Rule 3 on the basis of that agreement. If therefore the parties subsequent to the decision of the 'Panchas' alloing specific property to them, accepted the award, as I think they did then the lower Court was right in recording the agreement and in passing a decree in accordance with it.
On the question whether the Appellants accepted the award after it was made, the evidence on record amply shows that the parties signified unreservedly their acceptance of the decision of the.'panchas' by signing it after making the endorsement QSlyk eatwj gSa A The Appellant admitted that they signed the award buy suggested that they signed it under some misconcepaon and On account of some influence brought upon them by the 'panchas'. The Appellants did not state the nature of misrepresentation, fraud or influence on account of which according to them their ponsent was obtained Nor is there any evidence of any such influence or misrepresentation.
Learned Counsel for the Appellant said that thi fact that the award was made by the panchas "on the same date on which the dispute was referred to them, was in itself a proof of the fact that the award was not fair but arbitrary. These objections 'which have no bearing on the question of the Appellants' acceptance of the award after it was made, cannot clearly be inquired into.
Nor do they, in my opinion, having regard to the small extent of the property and the value of it indicate that the 'panchas' brought to bear a prejudiced mind in making a division of the property between the parties within a very short time. The contention of the Appellants that the award made by the 'panchas' could not be enforced under Order 23 Rule 3 must, therefore, be rejected.;
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