GHULAM HASAN - (1.) THIS appeal arises out of arbitration proceedings and is filed against the Judgment and order dated 8/11/1949, of a Division Bench (Reuben and Sinha JJ.) of the High Court at Patna affirming the decision of the Additional Subordinate Judge, Motihari in the District of Champaran. The appeal has been filed on a certificate under Article 133(1) of the Constitution and arises in the following circumstances.
(2.) THE appellant entered into a partnership business with respondents 1 and 2 to carry on grain business. THE appellant, who furnished the entire capital, was to have eight annas share in the profits, while respondents 1 and 2 were to get four annas each on the ground of contributing labour and skill. THEre was a dispute between the partners, the appellant alleging misappropriation of funds against respondents 1 and 2 to the tune of Rs. 35,000. By an agreement dated 29/09/1945, the dispute was referred to the arbitration of respondents 3 to 5, one of whom died during the pendency of the application for leave in the Patna High Court. The arbitrators made the award on 29/01/1946, whereby they awarded Rs. 3,500 to the appellant against respondent 1 to be paid in certain instalments in default of which the appellant was entitled to realize the entire amount in lump sum. They also held that the money which was found due from respondent 1 under the "bahi khata" account in addition to Rs. 3,500 was remitted having regard to his "labour and poverty". They further held that whatever amount was found due against respondent 2 under the 'bahi khata' account, the arbitrators awarded the entire amount to the appellant. The appellant filed an application on 13/02/1946, for setting aside the award although the same had not been filed in court. The two partners and the arbitrators were arrayed as opposite parties. Various allegations were made in the application against the arbitrators, the awards being characterised as illegal, arbitrary, dishonest and in excess of the power of the arbitrator. It was asserted that the respondents 1 and 2 were guilty of falsification of accounts and misappropriation of the funds of the business and that no proper taking of accounts an amount of Rs. 31,793/ 3/6 would be found payable by them to the appellant. The arbitrators filed a written statement in which they traversed all the allegation of the appellant and defended the award as being within the scope of the arbitration agreement. Respondent 1 also filed a written statement controverting the allegations of the appellant and denied that he was guilty of any falsification of accounts or embezzlement of funds. He totally denied his liability for any amount. On 3/08/1946, the appellant filed an application for withdrawl of his petition on the ground that it was premature. The Subordinate Judge allowed the application. The respondent 1 on the same day applied that a decree be passed in terms of the award, but this application was refused on the ground that the award should have been filed within the period of limitation. The respondent 1 filed a revision to the High Court of Patna against this order and the High Court set aside the order of the trial court and remanded the case to it with a direction to entertain the application of respondent 1 after giving a opportunity to the appellant to refile his objections to the award. Thereupon proceedings began afresh in the court of the Subordinate Judge and the appellant filed fresh objections on 2/12/1947, stating 'Inter alia' that the arbitrators had no power to remit any portion of the liability found against respondents 1 and 2. The case was fixed for 13/03/1948. The appellants' counsel asked for time but the application was refused and the court passed 'ex parte' order on the same date making the award a rule of the court. The appellant filed an application under order IX, Rule 13 for setting aside the 'ex parte' order but it was dismissed. The appellant thereupon filed two appeals in the High Court at Patna, one against the order pronouncing judgment in accordance with the award and the other against the order refusing to set aside the ex parte order. Both the appeals were dismissed by a common judgment dated the 8/11/1949. Leave to appeal was granted to the appellant under Article 133(1) of the Constitution.
(3.) A preliminary objection has been taken on behalf of the respondents that the order was one of affirmance and no leave should have been granted unless the High Court certified that the appeal involves some substantial question of law. It may be pointed out that so far as the dismissal of the appeal against the order refusing to set aside the ex parte order is concerned, the matter is closed and no application was filed by the appellant to reopen the matter by way of any application for leave to appeal to this court. So far as the order directing the award to be made a rule of the Court is concerned, the order of the High Court is to the following effect : " It is certified that as regards the value and nature of the case, it fulfils the requirements of Article 133(1) of the Constitution of India". There is no dispute about the valuation and though the order does not in terms mention that the case involves a substantial question of law, we are of opinion that the certificate was granted on that ground. There is no defect in the certificate and the preliminary objection is overruled. The only question which arises for consideration before us in the appeal is whether the arbitrators acted within the scope of the powers conferred upon them by the agreement to refer to arbitration. Having heard the learned counsel for both the parties, we are of opinion that the arbitrators exceeded the scope of their authority and their award cannot be allowed to stand. It cannot be doubted that the dispute between the parties related to the question whether on taking accounts between the parties the respondents 1 and 2 were liable to pay any amount to the appellant. It must be borne in mind that the appellant was claiming against the respondents 1 and 2 a sum of Rs. 35,000 on the basis of 'bahi khata' accounts. The arbitrators were appointed to adjudicate this dispute and to decide whether the respondents 1 and 2 were liable to the appellant for any amount and if so what? The agreement recites that the dispute is of long standing and the parties being anxious to avoid loss by recourse to litigation consider it desirable to have the dispute decided by the arbitrators. The original agreement which is in Hindi uses the words "Jo kuchh tai tasfiya faisala karenge Fricain ko qabul o manzur hoga'. It goes on to say "that the arbitrators should sit together, take down the statements of the parties, hear and consider the arguments brought forward by the parties, inspect the documents of all descriptions and take other evidence and evidence of witnesses and whatever award they shall give, is and shall be, acceptable to the parties and whatever award the arbitrators may give unanimously or by majority of votes shall be treated as true and correct and valid in every court and shall be binding upon all of us executants parties". Reuben J., who wrote the judgment with which Sinha J. agreed, construed the words "Tai tasfiya and faisaals" as meaning that the intention of parties was to give the arbitrators power to make concessions where such concessions appeared to them to be fair. ;