MANILAL MOTILAL Vs. GOKALDAS ROWJI

JUDGEMENT

(1.) The plaintiffs died this suit against the defendants claiming Rs. 2,925 as damages for breach of a contract dated the 10th duly 1917. By an agreement of reference, dated the 25th September 1919, the matters in dispute were referred to the sole arbitration of one Ramchander Pitamber without the intervention of the Court. The first meeting before the arbitrator was held on the 17th October: the next on the 29th November when only the defendants were present. The arbitrator made his award on the 30th November allowing Rs. 1750 for damages and Rs. 50 for costs to the plaintiffs. Meanwhile the plaintiffs had written, on the 25th November, to the arbitrator that they revoked his authority as arbitrator and cancelled the submission. The plaintiffs then moved for an ex, parte decree on the ground that the defendants had not filed their written statement, but the defendants were given time to enable them to file the award. On the 21st January 1920 the defendants gave notice that they would move that the award should be recorded as an adjustment or compromise of the suit, and for a decree being passed in terms thereof. The motion was heard before Kajiji J. who dismissed it on the ground that the award could not be recorded as an adjustment under Order XXIII, Rule 3, while as the agreement to refer had been made without the intervention of the Court, the application could not be made under the Second Schedule of the Civil Procedure Code.

(2.) This brings before us a question which has caused much difference of judicial opinion. We are dealing with an agreement to refer made by the parties to a suit without the intertion of the Court, followed by an award. We are not concerned with what may be the rights of the parties when an agreement to refer has been made and nothing further has been done. Clearly that cannot be recorded as an adjustment. If the parties wish to make it an order of Court they can do so under Part 1 of the Second Schedule. Here there has been an award, the validity of which is disputed by one of the parties. It was held in Pragdas v. Girdhardas (1901) I.L.R. 20 Bom. 76, 78 : 3 Bom. L.R. 431 that such an award could be recorded as an adjustment under Section 375 of the Code of 1882, corresponding to Order XXIII, Rule 3, of the present Code. There was a conflict of decisions between the Calcutta, Madras and Bombay High Courts on the one side and the Allahabad High Court on the other on the question whether the Court could pass a decree on an adjustment except with consent of the parties, and the addition of the words "where it is proved to the satisfaction of the Court" have been added to set at rest that conflict. If, then, an award is disputed, can a party ask the Court to try the question whether or not the award is valid, and if proved to be valid, to pass a decree in accordance therewith? This was doubted by Beaman J. in Rukhanbai v. Adamji (1908) I.L.R. 33 Bom. 69 : 10 Bom. L.R. 336 as the learned Judge thought that an application could only be made under Order XXIII, Rule 3 where the parties had accepted the award. In Shavakshaw v. Tyab Haji Ayub (1916) I.L.R. 40 Bom. 836 : 18 Bom L.R. 559. I held that Section 89 excluded any such applications being made under Order XXIII, Rule 3 as that section directed that all references to arbitration whether by an order in a suit or otherwise, and all proceedings thereunder should be governed by the provisions contained in the Second Schedule save so far as it was otherwise provided by the Indian Arbitration Act, 1899, or by any other law for the time being in force. In Harakhbai v. Jamnabai (1912) I.L.R. 37 Bom. 639 : 15 Bom. L.R. 340 it was held by Davar J. that Order XXIII, Rule 3, came within the definition of "any other law for the time being in force" but with all due respect for that learned Judge I cannot agree. In the first place Order XXIII, Rule 3 makes no mention whatever of references to arbitration and I do not think it was ever intended by the Legislature that it should apply to arbitration proceedings as such. It is only by treating an agreement to refer combined with the award as an adjustment by lawful agreement or compromise that arbitration proceedings can possibly be brought within the scope of that rule. But beyond that it would be contrary to all canons, of construction of statutes that, where an Act lays down that certain proceedings should be governed by the provisions contained therein relating thereto, save where provision was made by some other law in force, the provisions of the Act itself should be considered as laying down "some other law for the time being in force". The words "except as provided for in this Act" would have to be used. If, then, references to arbitration made otherwise than by an order in a suit, as the reference in this case was and all proceedings thereunder, are to be governed by the provisions of the Second Schedule, unless the Indian Arbitration Act or some other Act applies, and no such Act applies to this case, we must look to the Second Schedule to see whether any of its provisions lays down the procedure to be followed by the parties to this reference. It has been contended that none of the provisions covers the case of an agreement to refer made by the parties to a suit without the intervention of the Court. In Harivallabhdas Kalliandas v. Utamchand Manekchand (1879) I.L.R. 4 Bom. 1 : 15 Bom. L.R. 340 it was held that an agreement to refer by parties to a suit could be filed under Section 523 of the Code of 1882. The Court was of opinion that Section 525 also contemplated arbitration without the intervention of the Court by any person and with respect to "any matter" and contained no express exception as to parties to a suit or to matters in litigation in a suit actually pending. It was remarked that the procedure in such cases, as provided by Sections 523 and 525, viz. that the application should be numbered and registered as a suit was not the best adapted to a case where the matter was already before the Court, and would necessitate an application for stay of proceedings in that suit. In Vyankatesh Mahadev v. Hamchandra Krishna (1914) I.L.R. 38 Bom. 687 : 16 Bom. L.R. 653, where the application was also to stay the suit after an agreement to refer without the intervention of the Court had been entered into, Hayward J. considered that that decision must be looked upon as a doubtful authority since the decision of the Privy Council in Ghulam Khan v. Muhammad Hassan (1901) I.L.R. 29 Cal. 167, 182, 183, P.C. The facts in that case were that after a suit had been tiled the matters in dispute were referred to arbitration. When the award was made both parties objected to it. The Subordinate Judge before whom the application to set aside the award was heard overruled all objection and passed a decree in terms of the award. From this decree the defendants tiled an application for leave to appeal to the Chief Court of the Punjab. The Judge who admitted the appeal being of opinion that no appeal lay allowed the application to be amended so as to make it an application for revision in case the Court that heard the appeal should decide that no appeal lay The question whether or not an appeal lay or was prohibited by the last clause of Section 522 of the Civil Procedure Code of 1882 was referred to a Full Bench which decided that no appeal lay Thereafter an application for revision was entertained and the decree of the Subordinate Judge was modified. From this decision of the Full Bench and the judgment of the Division Bench on revision the defendants appealed to the Privy Council The whole argument turned on the proper construction of Section 522, now represented by para 16 of the Second Schedule. Their Lordships said at p. 182 ; The Chapter in the Code of Civil Procedure on reference to Arbitration (Chapter XXX VII) deals with arbitrations under throe heads: - 1. Where the parties to a litigation desire to refer to arbitration any matter in difference between them in the suit, in that case all proceedings from first to last are under the supervision of the Court. 2 Where parties without having recourse to litigation agree to refer their differences to arbitration and it is desired that the agreement of referent should have the sanction of the Court. In that case all further proceedings are under the supervision of the Court.

(3.) Where the agreement of reference is made and the arbitration itself fakes place without the intervention of the Court and the assistance of the Court is only sought in order to give effect to the award. 3. Then at p. 183 occurs the following passage : In cases falling under Heads II and III the provisions relating to cases under Head I are to be observed so far as applicable. But there is this difference which does not seem to have been always kept in view in the Courts in India, In cases falling under Head I the agreement to refer and the application to the Court founded upon it must have the concurrence of all parties concerned and the actual reference is the order of the Court. So that no question can arise as to the regularity of the proceedings up to that point. In cases falling under Heads II and III proceedings described an a suit and registered as such must be taken in order to bring the matter the agreement to refer or the award as the case may be-under the cognizance of the Court. That, is or may be a litigious proceeding-cause may be shown against the application-and it would seem that the order made thereon is a decree within the meaning of that expression, as defined in the Civil Procedure Code.