- (1.) Whether the Court is bound to accept the Award of the Arbitrators in a pending suit, in which the parties, inter se, outside the Court, independently and without the aid of the Court, decided to refer the dispute to Arbitrators and what is the effect of such Award if one of the parties is not willing to accept the same as a compromise under Rule 23 Rule 3 of the Code of Civil Procedure, is the question which is required to be decided by this Court in the present revision application.
(2.) Respondent No.1, Gujarat State Khadi & Village Industries Board, is the original plaintiff of Summary Civil Suit No.191 of 1983, which is pending in the City Civil Court at Ahmedabad. The said suit is filed for recovery of certain amount and the present applicants are defendant Nos. 1 and 2 in the said suit. The said suit has been filed by the plaintiff to recover Rs.2,78,54,408.47 Ps., along with the interest thereon. In this revision, we are not concerned with the merits of the aforesaid suit in any manner. During the pendency of the said suit, the parties to the suit, on their own volition, decided to refer the said dispute to two Arbitrators. Accordingly, the parties, without the intervention of the Court, decided to approach the Arbitrators in connection with the dispute in question. It is required to be clarified that the parties went to the Arbitrators in a pending suit, which is filed by the plaintiff to recover the aforesaid amount, and, it seems that the Arbitrators gave their Award on 10.12.1994. By the said Award, the Arbitrators recommended that the State Government may pay some grant to the defendants and the plaintiff-Board shall withdraw all civil and criminal cases which are filed by the plaintiff against defendant No.1-Sevasangh. The plaintiff-Board, subsequently, passed a Resolution, in its meeting on 28.1.1985, showing the willingness to accept, both the interim Award as well as the final Award. The Resolution of the Board is produced at pages 45 and 46 in the compilation. Since the suit of the plaintiff is already pending for final disposal, on behalf of the petitioners-original defendants 1 and 2, an application was submitted before the trial court at Exhibit 222. The said application is also produced along with the documents, annexed with the revision memo, in the compilation. The said application was given by the defendants by resorting to the provisions of Order 23 Rule 3 of the Code of Civil Procedure. In the said application, it is averred by the defendants that the plaintiff and the defendants agreed on 11.2.1994 to refer the subject matter to the Arbitrators and that the subject matter of the suit, along with the other subject matters, were referred to the Arbitrators for their decision and under the circumstances, the claim of the plaintiff in the suit stands fully adjusted in terms of the Award / Compromise as per the Award of the Arbitrators dated 10.12.1994 and as per the same, the plaintiff should withdraw the said suit in terms of the said Award. It is also stated in Exhibit 222 that since the plaintiff has not withdrawn the suit, the defendants are filing application under Order 23 Rule 3 of the Code of Civil Procedure, with a request that the court may accordingly pass a decree and it is also requested that the suit claim be treated as satisfied in terms of the Compromise / Award dated 10.12.1994 and to pass a decree accordingly.
(3.) The application was resisted by the original plaintiff on various grounds. By its reply at Exhibit 229, the plaintiff-Board contended that the application of the defendants does not satisfy the requirements of Order 23 Rule 3 of the Code of Civil Procedure and, therefore, such application was not maintainable. It is also the case of the plaintiff that the alleged agreement regarding referring the dispute to the Arbitrators is dated 11.2.1994, but in view of the provisions of Chapter IV of the Arbitration Act, 1940, in a pending suit, the reference can be made only in accordance with the provisions of the said Chapter. It is also averred that the Arbitrators have not followed the procedure, as required under the Arbitration Act. It is also averred that the Award was not published within a period of four months from the date of entering into the reference. It is also the say of the plaintiff that no stay was granted under Section 34 of the Arbitration Act. It is stated by the plaintiff in its reply that both the Arbitrators, one Zinabhai Darji as well as one Arvindbhai Buch, both were Trustees of defendant No.1-Trust and on that ground, the Award is vitiated. It is also the say of the plaintiff that the Arbitrators should have functioned in a quasi-judicial manner and that, their enquiry should not have been a slipshod one. The Arbitrators had not even heard the matter in an appropriate manner.;