Decided on May 05,1954



Falshaw, J. - (1.) THE facts giving rise to this Letters Patent Appeals are as follows. THE present appellant, a joint Hindu family firm named Gogan Ram Lachmi Narain, instituted a suit in the Court of the Senior Subordinate Judge at Hissar against Narsing Das respondent and his two sons, Durga Datt and Hazari Lal, individually as proprietors of the firm Gobind Ram Narsing Das, the firm as such not being impleaded as a defendant, for the recovery of Rs. 12,000/- on account of certain transactions, and also for rendition of accounts and recovery from the defendants of whatever was found to be due from them as partners in the firm. Only Narsing Das defendant put in an appearance to contest the suit and proceedings were taken 'ex parte' against his two sons. After the suit had been pending for some time, on 23-10-1950, the plaintiff and Narsing Das filed an application under Section 21, Arbitration Act, to refer the whole of the matters in dispute between them to the arbitration of one Badri Narain Mahajan. Statements of these parties were also recorded in Court and the reference was made to the arbitrator in question, who filed his award on 30-11-1950, which was for Rs. 19,044/11/- against all the three defendants.
(2.) IN due course separate objections were filed by Narsing Das and his two sons. The latter objected that their father had no authority to refer the disputes to arbitration on their behalf, and that this was done without any notice to them, while Narsing Das pleaded that there was no valid reference to arbitration since all the parties interested were not parties to the reference. This objection was accepted by the learned Senior Subordinate Judge who set aside the award, and the arbitration as a whole, and directed that the suit should proceed. Against this order the plaintiff filed an appeal in this Court which was accepted by the learned Single Judge Kapur, J. on 7-4-1953. The present appeal by Narsing Das is against this order. There does not appear to be any ambiguity about the terms of Section 21, Arbitration Act, which reads : "Where in any suit all the parties interested agree that any matter in difference between them in the suit shall be referred to arbitration, they may at any time before judgment is pronounced apply in writing to the Court for an order of reference." The section clearly requires that for a valid reference to be made to arbitration of disputes which form the subject-matter of a suit it is necessary that all the interested parties should join in the application for reference. There are in fact very numerous authorities of different High Courts in which it has been held, regarding the similar words which appeared in Para. 1 of Schecule 2 to Civil Procedure Code, that unless all the parties interested in a dispute consent, a Court has no jurisdiction to make an order of reference to arbitration, and an order of reference made without the consent of a party who has not appeared is illegal and an award made in consequence of such an order is equally illegal. The leading case laying down this proposition appears to be -- 'Laduram Nathmull v. Nandlal Karuri', AIR 1920 Cal 113 (2) (PB) (A), a decision of a Full Bench consisting of Sanderson, C. J., Mookerjee and Fletcher, JJ. This case was a particularly hard one from point of view of most of the parties involved, since the defendant, the failure to obtain whose participation in an application to refer the matters in suit to arbitration resulted in the arbitration proceedings being declared void 'ab initio', was an insolvent whose interests were really represented in the suit by the Official Assignee, who had joined in the application. It was decided that although the obtaining of the consent of the insolvent defendant to the reference to arbitration was in the circumstances little more than a formality, nevertheless the arbitration proceedings must be held void in view of the clear terms of the statute.
(3.) IN the present case it is quite obvious that the two sons of Narsing Das were interested parties, since the plaintiff's claim was made jointly and severally against all the three defendants individually as partners in the firm with which the plaintiff- firm had had dealings, and although the fact that they had allowed proceedings in the suit to be taken against them 'ex parte' might be interpreted in a loose or lay sense that they were not interested, it must be held that in the legal sense they were certainly interested. INdeed, when the award came it was against these two defendants, as well as their father, jointly and severally. In deciding the matter in the plaintiff's favour the learned Single Judge has followed the decision of Mukerji and Bennet JJ. in -- 'Bankey Lal v. Chotey Miyan Abdul Shakur', AIR 1931 All 453 (B), which purports to be based on the decision in -- 'Raghunath Sukul v. Ramrup Raut', AIR 1924 Pat 33 (C). I shall examine the latter case first. The fact's of the case were that the plaintiffs had brought a suit against 15 defendants claiming a declaration of title to, and recovery of possession of, certain land of which the plaintiffs alleged the defendants had dispossessed them. The land consisted of a number of separate plots in the separate possession of different defendants. During the pendency of the suit the plaintiffs and each of the defendants filed an application for the disputes to be referred to arbitration and this was done. However, when the award was filed, objection was taken on behalf of two minors who had been impleaded as legal representatives of their deceased father, who had died during the pendency of the suit, that the reference was invalid as they had not been properly represented at the time of the application by a 'guardianad- litem'. The trial Court accepted this objection and held that since all the interested parties had not joined in the application for reference the award was invalid. In the appeal against this order Dawson-Miller, C. J. and Kulwant Sahay, J. held that in this particular case, although the plaintiffs had brought a single suit against 15 different defendants, there was clearly a separate cause of action against each individual defendant, since each individual defendant was alleged to be in possession of a particular piece of land of which the plaintiffs were seeking to recover possession. It was therefore hold that although there was no valid reference on behalf of the two minors the rest of the reference of the dispute between the plaintiffs and the other defendants was valid and the part of the award which dealt with their cases could be upheld.;

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