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Rukhanbai Vs. Adamji Shaik Rajbhai - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtMumbai
Decided On
Judge
Reported in(1908)10BOMLR366
AppellantRukhanbai
RespondentAdamji Shaik Rajbhai
Excerpt:
.....on oral submission-validity-civil procedure code (act xiv of 1882), section 375- adjustment of suit-award on oral submission not an adjustment.;the parties to an administration suit consented (at the hearing), to its being referred to the commissioner to take the usual accounts and to determine their respective shares. accounts and objections were filed before, the assistant commissioner, and the parties appeared before him, when it was orally agreed, to save the costs of a lengthy enquiry, that the assistant commissioner should deal summarily with all matters in dispute and draft terms by which the parties were to be finally bound, and the assistant commissioner personally explained to defendants 1 and 6 that they would be bound by his decision even if he decided to give them one..........this proposal to the parties and in particular impressed upon the defendants that even should his decree award them no more than a rupee they were to be bound by it. to these terms all the parties assented. thereupon mr. modi made what he calls a draft decree. mr. strangrnan for the plaintiff and defendant no. 4 now moves the court to confirm this report and give a decree in its terms. defendant no. 6 represented by mr. chamier objects on the ground, as i understand him, that the principle upon which mr. modi has arrived at his conclusion is incorrect and not a principle upon which he (the sixth defendant) thought he would act. when the motion came on, mr. strangman asked the court to record mr. modi's report as an adjustment, compromise or satisfaction of the suit under and within the.....
Judgment:

Beaman, J.

1. This was an administration suit a decretal order was passed referring it to the Commissioner to take the usual accounts, When the matter came before the Assistant Commissioner Mr. Modi, it appears from his notes, (the substantial correctness of all the facts contained in which is not disputed) that with the object of saving parties considerable delay and expense, he proposed that they should leave the settlement of all matters in dispute between them in his hands. All the parties consented. From Mr. Modi's record, it is clear that they then agreed unreservedly and without any qualification to allow him to deal summarily with all the disputed matters and to draft (as he calls it) a decree by which they were to be finally bound. He says he fully explained every term of this proposal to the parties and in particular impressed upon the defendants that even should his decree award them no more than a rupee they were to be bound by it. To these terms all the parties assented. Thereupon Mr. Modi made what he calls a draft decree. Mr. Strangrnan for the plaintiff and defendant No. 4 now moves the Court to confirm this report and give a decree in its terms. Defendant No. 6 represented by Mr. Chamier objects on the ground, as I understand him, that the principle upon which Mr. Modi has arrived at his conclusion is incorrect and not a principle upon which he (the sixth defendant) thought he would act. When the motion came on, Mr. Strangman asked the Court to record Mr. Modi's report as an adjustment, compromise or satisfaction of the suit under and within the meaning of Section 375 of the Civil Procedure Code and thereon pass a decree in accordance therewith. To this Mr. Chamier objected that he had received no notice of any such application, that he was entitled to notice; and that not having been given notice, this application could not now be proceeded with.

2. It appears, however, that the suit was down on the board for passing a final decree in terms of the Assistant Commissioner's report, and I am not disposed to defer my decision upon what is substantially in issue in order to give effect to this technical objection. Mr. Strangman for the plaintiff strongly relies on the cases of Samibai v. Premji ILR (1895) 20 Bom. 304 and Pragdas v. Girdhardas ILR (1901) 26 Bom. 76 The latter case was decided in appeal by Sir Lawrence Jenkins C.J. and Starling J. There the suit was for dissolution of partnership and accounts. The suit was called on for hearing on the 24th February 1899 and by consent a decretal order was made referring it to the Commissioner to take the accounts. On the 31st March 1899 before any accounts were brought into the Commissioner's office the parties referred the subject matter of the suit to arbitration and on the 28th of June 1900 the arbitrators made their award. On the 7th December 1900 the plaintiffs gave notice that they would move in Court that the agreement and the award be recorded under Section 375 of the Civil Procedure Code. A decree was passed accordingly on the 13th December 1900 in which the submission and the award were recorded under the said section and the terms of the award were embodied in it. The Appeal Court held that the reference and the award constituted an adjustment of the suit by a lawful agreement or compromise and upon that ground upheld the decree of the Court below. Their Lordships referred with approval to the case of Samibai v. Premji which had been decided in the same way and upon the same principle by Starling J. on the Orginal Side of the High Court. It is certainly not easy to distinguish the principle of those decisions from the principle upon which Mr. Strangman now asks me to act. And were I satisfied that no distinction could be drawn, notwithstanding that in some points the conditions of those cases and this case are different, I should feel myself bound by those decisions. After having carefully studied not only those cases but many others dealing with the same question decided in the other High Courts, while I must admit that the weight of authority is heavily on the plaintiff's side I feel very grave doubts as to some parts at least of the reasoning upon which many of those decisions rest. Reference was made in Pragdas v. Girdhardas, to the Full Bench case of Brojodurlabh v. Ramanath ILR (1897) Cal. 908, where, although the decisions of the majority were substantially in accord with the view taken by Starling J. in Samibai v. Premji, O'Kinealy J., in a dissenting judgment, doubted the correctness of that decision. For my own part, speaking with all respect to the eminent Judges who have adopted the contrary opinion, I think that that Judge's doubt was well founded. Again Jenkins C.J. says ' that the decision in Samibai v. Premji has met with the approval of Farran C.J. in Ghellabhai v. Nandubai ILR (1896) 21 Bom. 335. ' The passage referred to however is merely an obiter dictum So too in the case of Lakshmana Chetti v. Chinnathambi ILR (1900) Mad. 326 in which Sir Lawrence Jenkins says that Mr. Justice Starling's view, if not affirmed, certainly was not rejected, the most that can be said is that the Judges there in an obiter dictun seem to have approved of it. It is perhaps worth noting that the submission to arbitration in Pragdas v. Girdhardas was made before the Indian Arbitration Act had come into force. I do not myself think that that circumstance materially affects what seems to me the fundamental principle of the decision. The learned Chief Justice says : ' First it is said that Chapter 37 of the Code of Civil Procedure, 1882, is an exhaustive exposition of the power to refer to arbitration pending a suit. I can find nothing however in Chapter 37 which invalidates a proceeding not in accordance with its provisions, beyond the result that non-compliance deprives a party of a right to claim the consequences the Chapter prescribes.' And I apprehend that the same process of reasoning would apply to any submission to arbitration which does not comply with the requirements either of Chapter 37 of the Civil Procedure Code or of the Indian Arbitration Act IX of 1899. But it seems to me that where a special procedure is provided for extraordinary extra-judicial methods of settling disputed claims, it must have been the intention of the legislature that that procedure and no other was to be followed. To say that Chapter 37 was not, before the passing of the Indian Arbitration Act, an exhaustive exposition of the powers to refer to arbitration and that a reference to arbitration not made in accordance with its provisions might nevertheless be given much more speedy and peremptory effect to by bringing it in under Section 375 for there as on that 'non-compliance deprives a party of a right to claim the consequence the chapter prescribes'-seems to me, speaking with the greatest respect, a questionable proposition. Because the reason advanced to support it will, when closely examined, become, I think, quite inadequate. What is implied in it is that by not complying with the statutory provisions regulating submission to arbitration, the worst that can befall a party so failing to comply is the loss of some advantage that he would have gained by compliance. But if notwithstanding that he can take the benefit of Section 375, so far from being in a worse he is in a much better position than if he had been bound by the provisions either of the Indian Arbitration Act or of Chapter 37. In both the latter cases a party who, after making a proper submission, is dissatisfied with the award, has a right of challenging it before it can be converted into a decree or any further action taken upon it. Whereas under the principle of Pragdas v. Girdhardas, no sooner has a party made an irregular submission, on which an award, no matter how full of defects, has been passed, than the other party can bring it in under Section 375 and without having any objections investigated get a final decree upon it. This appears to me, speaking with all proper respect, one fatal objection to the principle upon which the plaintiff here relies. Another objection, which I myself feel very strongly, though I cannot deny that this does seem to have been present to the mind of other more learned and eminent Judges who have nevertheless no difficulty in overcoming it, is that a mere agreement to refer a matter to arbitiation, cannot logically and without unduly straining language, be fairly called an adjustment of a suit. Nor do I think that that difficulty is removed by the fact that an award is made. No doubt if the parties accept the award, then the agreement to refer plus the award which they had accepted, would constitute an adjustment of the suit, by a lawful agreement. But mere submission to arbitration cannot, I think, be carried further than a step towards the ajustment of a suit. This difficulty is dealt with in Prdgdas v. Girdhardas. The learned Chief Justice, relying upon Lievesley v. Gilmore (1866) L.R.I.C. P. 570 says : 'But every submission to arbitration implies an obligation to perform the award of the arbitrator, so that here there was an agreement to perform the award in adjustment of the suit and that is an adjustment of the suit by agreement.' One obvious objection to that reasoning is that it does away at once with the necessity for all the special procedure prescribed in the Indian Arbitration Act and Chapter 37 of the Civil Procedure Code. For if that principle be uniformly sound and accepted, parties submitting to arbitration would be under an implied promise to accept the award, whatever be its nature and however it has been arrived at. That is in fact what they are obliged to do by applying the principle in the same manner in which it has been applied in those cases, so as to enable a party wishing to enforce the award to do so directly under Section 375. It would be easy to pursue this analysis further by way of explaining and justifying the doubts I feel about the correctness of the decision in Pragdas v. Girdhardds. But, as I have said, unless I can distinguish that from the present case I should undoubtedly feel myself bound to follow it. There is, however, one passage in the learned Chief Justice's judgment, which does. I think, warrant me in saying that this is a different case. He says' it is conceded, and I must assume correctly, that under the special circumstances of the case the submission is valid.' I will not pause, as I might do, to amplify the implication contained in these words beyond saying that notwithstanding what has preceded the learned Chief Justice evidently thought that a submission to arbitration, before it can be treated as an adjustment of the suit, must be 'valid,' that is today, made in conformity with the law governing arbitration proceedings. I need not further dwell upon the difficulty which an accurate analysis of what is herein implied might introduce in logically and consistently interpreting the whole judgment. It is enough for my present purpose to point out that had the learned Chief Justice felt any doubt as to the validity of the submission, it is at least fairly arguable whether he would have come to the conclusion he did. In that case, as indeed in all the other cases to which it refers, there was a written submission. It is true that at that time the Indian Arbitration Act was not in force, and that presumably as this submission was held not to fall within the scope of Chapter 37, there was no statutory need for a written submission. Now, however Section 4 of the Indian Arbitration Act requires that wherever that Act is in force, submission to arbitration must be in writing. In the present case there has been no such written reference or submission. I am not denying that this is a technical rather than a substantial distinction because from Mr. Modi's record it is quite clear that what he wrote down in the present case fairly and fully expressed all the wishes and intentions of the parties and had they signed his notes there would have been, to all intents and purposes, a written submission of the kind required by law. As the facts stand, there has been no legal and valid reference to arbitration at all. Mr. Modi's award, therefore, (for it really is an award and nothing else), has no legal foundation, and can, therefore, have no legal consequences. That, I think, is sufficient, in the view I take of Section 375 and of the decisions upon it, to relieve me from the necessity of following against my own judgment the majority of those decisions. As, then, there has been no reference to arbitration and no award, what adjustment of the suit canthere be to which I am asked to give effect under Section 375? It appears to me that there can be absolutely none. I come to this conclusion with great reluctance because it is clear that all the merits are on the plaintiff's side. There can be no question that all the parties did authorise Mr. Modi to settle their disputes and did agree to accept his decision as finally binding upon them. When, however, that decision came to be known, the defendant 6 repudiated it. He has thus gone back upon his own distinct undertaking and I cannot pretend that I feel the least sympathy with him because he has succeeded upon a highly technical point. Indeed I feel so strongly in this matter that although he is here nominally successful, I shall order him to pay all costs which may have been incurred from the date on which all parties, including himself, agreed before Mr. Modi that he should finally decide their disputes, up to the date of the final order upon this motion.

3. Upon these terms I direct that the motion be dismissed and that the matter be referred back to Mr. Modi to take it up as and from the date upon which the parties agreed to make him their sole arbitrator.

4. Special Commissioner to pay the costs of the other parties out of the share of defendant 6.


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