DAVE, J. - (1.) THIS is the plaintiffs' first appeal against the judgment and decree of the District Judge, Bikaner dated the 26th of April, 1952 whereby the suit has been dismissed.
(2.) THE facts giving rise to this appeal are that in the Raj Patra (Gazette) dated 31st January, 1948, of the former State of Bikaner, a notice was published on behalf of the Secretary Stores Purchase Committee that the contract for the right of collecting coal-ashes dropped by engines of the Bikaner State Railways would be auctioned publicly on the 3rd February, 1948. This contract was to be given from the 1st of Feb., 1948, to 31st March, 1949 i.e., for a period of 14 months. THE contract was accordingly auctioned on the 3rd February, 1948. THE plaintiffs' firm, which works in the name and style of M/s. Ganeshilal Ragunath Singh, was one of the bidders at the said auction. THE auction was knowed down in the plaintiff's favour for a sum of Rs. 1,27,800/-. A formal agreement about the said contract was executed by both the parties on the 11th of June, 1948 and it was signed by Ganeshilal and Ragunath Singh plaintiffs on the one hand and the General Manager State Railway on the other. On the 25th of August, 1949, the plaintiffs brought a suit for Rs. 17,396/- against the State Council of the former State of Bikaner. It was averred by the plaintiffs that the Government of Bikaner had sold through the Bikaner State Railway coal-ash worth Rs. 17395/- after the 1st of February, 1948, and that this coal-ash formed part of the stock which was auctioned to the plaintiffs. It was stated that the plaintiffs were the sole-owners of all the coal-ash lying within the premises of the Bikaner State Railway on 1st February, 1948 and that the Government of Bikaner was not competent to sell any part of it after that date. It was further alleged that at the time of the auction, the Secretary Stores purchase Committee had made it clear that the stock which was sold to the last contractor and which was not removed from the railway premises was also included in the stock of coal-ash which was auctioned, that if the said stock costing Rs. 17,395/- was already sold to some other persons, the Secretary Stores Purchase Committee should have informed the plaintiffs of the same, that the agreement entered into by the plaintiffs was thus obtained by mis-representation and therefore, it was prayed that a decree for Rs. 17,395/- with cost be given in favour of the plaintiffs against the defendant. As pointed out above, the defendant in the first instance was the State Council of the former State of Bikaner. After the merger of the Bikaner State into the State of Rajasthan, the State of Rajasthan was impleaded as defendant. Later the Union of India was substituted as a defendant since the railway was taken over by it. The defendant traversed the plaintiffs' claim. Among other objections it was pleaded that one of the conditions of the agreement dated the 11th of June, 1948, on which the suit was founded, was that the decision of the General Manager on any matter arising out of the agreement shall be final and binding on the contractor, that the plaintiff had accordingly referred the matter to the General Manager that the General Manager had given his decision and, therefore, the plaintiffs had no right left to bring the present suit. The trial court framed eight issues, of them, issue No. 7 was in the following language: "Has the defendant got the dispute arising out of the agreement Ex. P-l settled by the General Manager, Bikaner State Railway under Art. 11 of the agreement and so his decision is final and cannot be challenged in a civil court?" This issue was decided by the trial court against the plaintiffs and on that account plaintiffs' suit was dismissed. The appellants' learned advocate has contended that although the plaintiffs had agreed to abide by the decision of the General Manager on any matter arising out of the agreement, the dispute giving rise to the present suit did not arise out of the agreement but independently of it since the agreement itself was obtained by the defendant by misrepresentation. Therefore, the decision of the arbitrator was not final and binding on the plaintiff. It was next contended that the matter was not referred to the arbitrator in the manner provided in the agreement. It was further pleaded in the alternative that even if it be taken that the matter was referred to the General Manager the decision given by him was vitiated on account of legal misconduct on his part. The questions which, therefore, arise for determination in this Court are: - (1) Whether the agreement was obtained by mis-representation and the present suit arises out of the contract or independently of the same; (2) Whether the matter was referred by the plaintiffs to the arbitrator as provided m the agreement; and (3) Whether the decision of the arbitrator, if any, was vitiated by his legal misconduct. Regarding the first point it has been argued by the appellants' learned advocate that the appellants had raised their bid to Rs. 1,27,800/- because they were given to understand by the Secretary, Stores Purchase Committee that all the coal-ash which was laying within the premises of the Bikaner State Railway was auctioned. It is alleged that the present defendant which now represents the Government of the former State of Bikaner definitely made a mis-representation to the plaintiff appellants that the stock which the respondent latter sold for Rs, 17,395/- was also included in the bid and if such a misrepresentation were not made, the appellants would not have entered into the agreement. It is urged that since the agreement itself was obtained by the respondent by mis-representation, the contract was voidable. The present suit did not arise out of the contract because the validity of the contract itself was challenged on the ground of misrepresentation. It is contended that on this account the decision of the arbitrator could not be final and binding on the appellants and that the trial court ought to have gone into the question of misrepresentation and in refusing to do so it had committed an error of law. In reply, it was pointed out by learned advocate for the respondent that the respondent did not obtain the agreement Ex. P-A by any misrepresentation. The coal-ash which was auctioned was only that of the, railway stock of ashes and not of the stock which was already sold away to the previous contractor before the said auction took place. It has also been pointed out that soon after the auction was finished, the appellants had started making representations with regard to the stock which is the subject of the present suit and that it was made clear that it was not included in the stock which was auctioned. The agreement Ex.P-A was executed by the parties on the 11th of June, 1948, i,e., more than five months after the auction. The appellants by that time knew all the facts and since they had entered into the agreement inspite of their knowledge of the correct position, the question of misrepresentation did not arise. We have gone into the record of the trial court and we find that from the plaintiff's own documentary evidence, Ex.P-6, it appears that on the 6th of March, 1948 they had written a letter to the Secretary, Stores Purchase Committee of the former State of Bikaner saying that when the contract for coal-ash was auctioned on 3rd February, 1948 they were given to understand by the Secretary Stores Purchase Committee that stock of ashes available on the line on 1st February, 1948 would be included and on this assurance they had tendered so high. It was pointed out that stock of ashes costing Rs. 17,395/- was sold thereafter, and that if they had known that this stock of ashes was not included in the contract they would not have offered such high rates. It was also prayed in that letter that the amount of Rs. 17,395/-which was realised by the railway administration should be returned to the plaintiffs. It is quite clear from this letter the plaintiffs objected to the sale of the stock, to which the present dispute relates, as early as 6th March, 1948. The plaintiffs were, thus, well aware of the correct position when they entered into the formal agreement on the 11th June, 1948. Paras 1 and 11 of this agreement run as follows : - Para 1: "An agreement made this the 11th day of June Nineteen Hundred Forty Eight between the Government of Bikaner acting through the General Manager, Bikaner State Railway (hereinafter called "the Government") of the one part and Messrs Ganeshilal Raghunath Singh contractors of Dahina District Gurgaon (hereinafter called "the contractors") of the other part. Subject to the terms and conditions hereinafter contained, the General Manager, Bikaner State Railway (hereinafter called "the General Manager") hereby agrees to allow the contractor on and from 1st February, 1948 to 31st March 1949, to remove from locomotive sheds and railway station yards excluding railway workshops on the Bikaner State Railway coal ashes (hereinafter referred to as "ashes") dropped by engines including the railway stock of ashes lying within the premises on 1.2.1948." Para 11: The General Manager shall be the sole Judge of the contractor's work and his decision on any matter arising out of this agreement shall be final and binding on the contractor, his heirs and successors." It is crystal clear that soon after the auction of the coal-ashes to the appellants, they raised an objection that the Bikaner State Railway administration had sold stock costing Rs. 17,395/- out of that which was sold to them. The other party took the stand that the stock in dispute was sold long before the auction and was not included in the agreement. When both the parties entered into a formal agreement Ex. P-A on 11th June, 1948, the plaintiffs were fully aware that the other party had already sold the disputed stock and did not consider it to be a part of the stock which was auctioned to the appellants. It is further clear from the second part of the first para mentioned above that the agreement was about the removal of coal-ashes dropped by engines including the railway stock of ashes lying within the premises on 1st February, 1948. The words "railway stock of ashes" are very significant and they clearly indicate that the agreement related to only that stock which belonged to the railway on the 1st February, 1948, and not that which was already sold away by them or which was not in their ownership at that time. When inspite of all this knowledge, the appellants entered into the agreement, Ex. P-A, it cannot be said that there was any mis-representation on the part of the defendant respondent. Even if it be considered that the dispute between parties was standing at the date of the agreement, that dispute arose out of the agreement itself and the appellants having agreed to abide by the decision of the General Manager on all matters arising out of the agreement, the decision of the General Manager according to clause 11 of the agreement was final and binding on them. The appellants have nowhere mentioned either in the plain or thereafter that the defendant had in any way coerced them to enter into the agreement Ex. P-A or that any misrepresentation of facts which were not already known to them was made before this agreement was entered into. The appellants' learned advocate has referred to the case of Pramada Prasad Mukharjee vs. Sagarmal Agarwal (1) (A.I.R. 1952 Pat., 352.). In that case it was held that: "If there be in a suit allegation and counter-allegations of fraud or misrepresentation in bringing a contract containing an arbitration clause into existence, such a suit is independent of the contract, and the dispute must be decided by the court and not by the domestic tribunal, for the repudiation is of the contract itself, and not of the obligations arising out of the contract". It may be pointed out that the above case does not help the appellants because the dispute therein was regarding the factum and validity of the agreement itself. In the present case, it is not denied by the appellants that they entered into the agreement nor has it been proved that any fraud or misrepresentation was made by the respondent before the execution of Ex. P-A.
(3.) LEARNED counsel for the appellants has next referred to the case of Gaya Electric Supply Co. vs. State of Bikaner(2) (A.I.R. 1953 S.C., 182.) in which it was observed by their lordships of the Supreme Court that : "If the arbitration agreement is broad and comprehensive and embraces any dispute between the parties "in respect of" the agreement, or in respect of any provision in the agreement, or in respect of anything arising out of it, and if the parties seeks to avoid the contract the dispute is referable to arbitration if the avoidance of the contract arises out of the terms of the contract itself. Where, however, the party seeks to avoid the contract for reasons de hors it the arbitration clause cannot be restored to as it goes along with other terms of the contract." This observation of their lordships also is of no avail to the appellants because as discussed above the present dispute between the parties arises out of the agreement itself. The appellants do not seek to avoid the contract for reasons which may be de hors it and, therefore, the first objection raised by the appellants cannot succeed. Coming to the second point it was urged by the appellants' learned advocate that after the execution of the agreement Ex. P-A, the appellants did not submit their case to the General Manager for his decision, that if any letters were written by the appellants before the execution of the agreement, they could not be deemed to be a submission in terms of the agreement and, therefore, the decision of the trial court to the effect that the arbitrator had given his decision is not correct. Reference was made in this connection to Ex. D-A. Ex. D-A is a letter which was written by the General Manager, Bikaner State Railway to the appellants on the 8th September, 1948. In this letter reference was given to the appellants' letters dated the 10th February, 1948, 6th March, 1948 and 26th May, 1948 and it was replied the enquiries made in the matter showed that no coal ashes were sold after 1st February, 1948 by the Railway Administration as alleged by the appellants and, therefore, they could not claim sale-proceeds of ashes sold prior to that date. It was argued on the basis of this letter that this decision, although of a date subsequent to the agreement, referred only to letters which were written before the date of the agreement and, therefore, it could not be said to be a decision in terms of the agreement. There would have been some force in this argument but it appears from Ex. D-B and Ex. D-E that the appellants had written to the General Manager of the Bikaner State Railway even after the execution of the agreement. Ex. D-E is a letter from the appellants to the General Manager dated 18th September, 1948. It is clear that this letter was written subsequent to the agreement Ex. P-A which is 11th June, 1948. In this letter the appellants repeated their claim and referred to several documents to show that sales of certain stocks of coal-ashes were made at several stations by the railway administration even after 1st February, 1948 and in the end it was prayed as follows: "As regards our claim we hope you would be good enough to close this as we have placed before your goodself sufficient proofs in support of our claim and we hope we shall receive justice at your hands." To this long letter, the General Manager sent a reply Ex. D-B to the appellants on the 9th of October, 1948. Referring to the appellants' letter dated 18th September, 1948 the reply given was in the following language : - "You seem to be labouring under some misapprehension. C. R. Notes given in your letter refer to the sales of coal ashes effected prior to 1.2.48. Under the circumstances, you must pay Rs. 17,385/- the balance of instalment due forthwith vide clause 2 of the agreement, otherwise you will be prohibited from removing coal ashes after a week's time." It is thus quite clear from Ex. D-B and Ex. D-E that even after the execution of the agreement the appellants had made a submission of the dispute to the General Bikaner State Railway, who according to the agreement was the sole arbitrator, and after looking into the evidence which was pointed out by the appellants in the said letter, the General Manager disallowed their claim saying that the sales referred to by the appellants were effected prior to the 1st of February, 1948. The second contention of the appellants also, therefore, that they had not referred the dispute to the arbitrator after the agreement, is found to be incorrect. The last argument of the appellants, advocate is that the General Manager's decision was vitiated by legal misconduct because no chance of hearing the appellants was given to them. In reply it was pointed out by the respondent's learned advocate that in the first instance it was apparent from Ex. D-B that the arbitrator had looked into the evidence which was pointed out by the appellants and whereby they wanted to support their claim. Secondly, it has been urged that the plaintiffs did not bring any suit for setting aside the award on the ground of legal misconduct on the part of the arbitrator. The present suit was only for damages for breach of the contract and that in view of the provisions of sec. 29 of the Contract Act of the former State of Bikaner, the appellants were debarred from bringing any such suit. Sec. 29 of the Contract Act of the former State of Bikaner runs as follows: - "Every agreement, by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights, is void to that extent. Exception 1. - This section shall not render illegal a contract by which two or more persons that any dispute which may arise between them in respect of any subject or class of subjects shall be referred to arbitration, and that only the amount awarded in such arbitration shall be recoverable in respect of the dispute so referred. When such a contract has been made a suit may be brought for its specific-performance, and if a suit, other than for such specific performance,or for the recovery of the amount so awarded is brought by the party to such contract against any other such party in respect of any subject which they have so agreed to refer, the existence of such contract shall be a bar to the suit. Exception 2. - Nor shall this section render illegal any contract in writing by which two more persons agree to refer to arbitration any question between them which has already arisen or affect any provision of any law in force for the time being as to reference to arbitration." It may be pointed out that this section corresponds to sec. 28 of the Indian Contract Act. But while para (2) of exception 1 has been repealed in the India Contract Act, it was not repealed by any subsequent legislation in the former State of Bikaner. The Indian Contract Act was brought into force in Rajasthan for the first time by the Rajasthan Adaptation of Central Laws Ordinance (No. IV of 1950) from the 24th day of January, 1950. Before that date the Contract Act of the former State of Bikaner was in force at that place. The present suit was filed, as pointed out above, on 25th August, 1949, and therefore, sec., 29 of the Contract Act of the former State of Bikaner was applicable on that date. According to para (2) of exception 1, the appellants were debarred from bringing a suit in respect of the subject which they had agreed to refer to arbitration as per their agreement Ex. P-A. In the case of Ratanji Virpal & Co. vs. Dhiranjilal Manilal (1) (A.I.R. 1942 Bom , 101.) it was held that under the Arbitration Act, 1940, it is not competent to file a petition for setting aside an award till the award has been filed. In the present case, the appellants did not file an award nor did they file any petition for setting it aside. Their present suit for damages for breach of the contract is, as pointed out above, barred by sec. 29 of the Contract Act of the former State of Bikaner. Although no objection has been taken by the appellants' learned advocate, still it would be proper to add a few words regarding an argument which may possible be taken about Exception 1 to sec. 29 of the Contract Act referred to above. It may be argued that in the present case the parties had only agreed to refer the dispute to arbitration but there was no further stipulation that the amount awarded in such arbitration shall be recoverable in respect of the dispute so referred, and therefore Exception 1 is not applicable to this case. Such an argument may be raised on the wordings of para (1) of Exception 1 because the two clauses, namely, ".........in respect of any subject or class of subjects shall be referred to arbitration" and that only the amount awarded in such arbitration shall be recoverable in respect of the dispute so referred" are jointed by the conjunction "and". It may be argued that unless both the conditions as present in a certain contract, para (2) of Exception 1 may not be applicable because it beings with the word "such" which refers to the contract mentioned in para (1) of Exception 1. We have given our careful consideration to this aspect of the question also and we think that the word "and" has been used here in a disjunctive and not in a conjunctive sense. In other words, the word seems to have been used in the sense of "or". Apparently there seems no reason to interpret exception (1) as meaning that if there is an agreement to refer any subject or class of subjects to arbitration, it must necessarily be provided further in every agreement that only the amount awarded in such arbitration shall be recoverable in respect of the dispute so referred. Such a condition is ordinarily implied in an arbitration agreement. In our opinion there can be valid agreements for arbitration even without a specific clause that only the amount awarded by the arbitrator shall be recoverable. ;