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Zumaklal Motiram Vs. Fulchand Tarachand - Court Judgment

LegalCrystal Citation
SubjectArbitration;Civil
CourtMumbai
Decided On
Case NumberFirst Appeal No. 177 of 1938
Judge
Reported inAIR1941Bom20; (1940)42BOMLR867
AppellantZumaklal Motiram
RespondentFulchand Tarachand
DispositionAppeal allowed
Excerpt:
execution of decree-execution proceedings-arbitration-court's permission to refer dispute to arbitration-whether court competent to so permit-validity of arbitration proceedings-civil procedure code (act v of 1908), order xxi, rule 2; 0rder xxiii, rule 3; sch. ii.; it. is competent to an executing court to give permission to, parties to refer their dispute, arising out of execution proceedings, to arbitration. such arbitration proceedings resulting in an award are valid as an adjustment of the existing decree.; narayan v. dhondiba (1936) 38 bom. l.r. 1303 and t. wang v. sana wangdi (1924) i.l.r. 52 cal. 559, disapproved. - - the defendants were given time to pay, and it was stated by one of the defendants that one of the heirs of the plaintiff had been satisfied in full. 3. the..........is under special regular darkhast no. 178 of 1920, which was the darkhast that resulted in the award proceedings. the mention of this darkhast of 1920 in the column provided for adjustments implies that what was being executed was the adjusted decree. it was also argued on behalf of the defendants that there was in fact no fresh decree passed upon the award proceedings. but that is immaterial if sch. ii does not apply to execution proceedings, since the result of the award would be merely an adjustment of the original decree, and it was not necessary to pass any new decree at all. indeed it is clear that an executing court would not be entitled to pass a new decree.8. mr. dixit next argues in support of the order of the court below that even 'if we can regard the original decree as.....
Judgment:

Macklin, J.

1. This appeal arises out of the dismissal of a darkhast. The original plaintiff? sued in 1906 for partition of property in a suit in which the principal defendant was the father of the present respondents Nos. 2 and 3. The plaintiff himself was the father of the present appellant. A decree was given allowing the plaintiff a share in the property of 61/2 annas and the principal defendant a share of 9 1/2 annas, and between then and the year 1919 five darkhasts were filed by the plaintiff, at which satisfaction of various amounts was obtained. In 1920 the three sons of the original plaintiff, who was then dead, brought a darkhast at which commissioners were appointed to divide the rest of the property. On the application of the parties two pleaders and also an umpire were appointed to settle the partition. After they had worked for about a year the parties filed a statement before the arbitrators saying that they had settled the amount remaining due to the heirs of the original plaint- iff at Rs. 22,501 in substitution of the division so far made by the arbitrators and asking that the arbitrators should decide how the amount was to be paid and what future interest should be payable upon it. The principal parties to this darkhast were, as 1 have said, the heirs of the original plaintiff. But there was also one party, Bhagwan, who did not sign the purshis. The matter was placed before the Court, and the Court allowed the arbitrators to make an award which provided for payment in twelve instalments with nine per cent, interest on any unpaid instalments from the date of default. The whole amount was to be recovered at once in the event of four defaults. The Court then passed the following order: 'None of the parties having objected to the award, it is ordered to be filed and decree to be drawn accordingly.' But no decree was actually drawn since the parties did not pay the stamp. The Court upon that ground ordered: 'The darkhast is disposed of. The parties to bear their own costs.'

2. In 1926 a darkhast was presented for the recovery of one instalment. The defendants were given time to pay, and it was stated by one of the defendants that one of the heirs of the plaintiff had been satisfied in full. It was admitted that under that instalment a sum of Rs. 1,401 was due, but the total amount claimed by the plaintiff under the instalment was not admitted. That darkhast was dismissed as the plaintiff was not present to show what properties should be attached. In 1931 another darkhast was presented by the present appellant. That darkhast was dismissed as the plaintiff did not want to proceed with it ' for the present'. In 1935 another darkhast was presented for the amount that had been found due (together with interest) in the darkhast of 1931. That also was dismissed as the plaintiff did not want to proceed. On December 4, 1936, the same heir of the original plaintiff presented the darkhast with which we are now dealing. It was for a sum of Rs. 7,500 previously found, to be due, together with interest.

3. The defendants contended inter alia that the reference to arbitration in the year 1923 was illegal in so far as arbitration proceedings under the Code of Civil Procedure do not apply to execution, and therefore the decree of 1923 and all subsequent proceedings were bad. They also contended that no decree was actually drawn up and consequently the darkhast had no basis.

4. The executing Court upheld the contention that an award cannot be made in execution proceedings, and also held that it was not open to the decree-holder to execute a decree obtained in such circumstances. The other questions that arose upon the contentions of the defendants, including the question of the amount due, were not gone into. The darkhast was dismissed upon the legal point, and the darkhastdar now comes in appeal.

5. The trial Court relied upon the decision in Narayan v. Dhondiba : (1936)38BOMLR1303 . There it was held by a single Judge of this Court that the provisions of sch. II of the Civil Procedure Code not being applicable to execution proceedings, it was not permissible to an executing Court to refer a dispute between the parties in execution of a decree to arbitration under the schedule. A decision upon the same lines was arrived at in T. Wang v. Sana Wangdi (1924) I.L.R. 52 Cal. 559. In that case on an application for execution of a money decree, an objection was taken by the judgment-debtor that the decree was satisfied out of Court, and the matter being referred to arbitration at the instance of the parties an award was thereupon made. It was held that the Court was not competent to refer the matter to arbitration and that the award made was invalid and unenforceable. But the point taken before us in appeal is that the arbitration proceedings resulting in an award are valid as an adjustment of the existing decree. Neither in the Bombay case cited nor in the Calcutta case was the validity of the arbitration proceedings in execution considered from this point of view. In his notes under Order XXIII, Rule 3 (which provides for the adjustment of suits out of Court and the recording of compromises of suits), Sir Dinshah Mulla cites a number of cases which show that all the High Courts with the exception of the Calcutta High Court have treated the submission and the award in arbitration proceedings as an adjustment of a suit under Rule 3 of Order XXIII; and if arbitration proceedings can operate as an adjustment of a suit, there is prima facie no reason why they should not also operate as an adjustment of a decree, even if (as seems to be the case), sch. II of the Civil Procedure Code does not apply to execution proceedings.

6. Mr. Dixit on behalf of the defendants has argued that any adjustment which results from a procedure not provided by the Code arises out of an illegal procedure and is itself illegal. But it is difficult to see how there is any illegality in adapting the procedure provided in sch. II to execution proceedings, if those proceedings are regarded merely as a means to the adjustment of the decree. It is open to the parties to adjust their differences under Order XXI, Rule 2, in execution proceedings, and there is no reason to suppose that they cannot themselves adopt any procedure they like; that is to say that they could without the intervention of the Court refer their differences to arbitration and ask the Court to treat the decision arrived at after arbitration as an adjustment of the decree. All that the Court has done in this case is to give permission to the parties to do what they were prima facie entitled to do even without its permission; and although there may be no specific provision for the grant of such formal permission, it is difficult to see how there is any illegality in giving it.

7. Mr. Dixit however argues that what the darkhastdar is trying to execute is not the original decree as adjusted but the award. He has referred us to the darkhast itself. Column 7 without mentioning the award gives particulars of the award. That does not mean that what the darkhastdar is trying to execute is the award. Column 5 of the darkhast, which requires the darkhastdar to state if any payment or adjustment has been made, states that no payment has, been given and also states that the darkhast is under Special Regular Darkhast No. 178 of 1920, which was the darkhast that resulted in the award proceedings. The mention of this darkhast of 1920 in the column provided for adjustments implies that what was being executed was the adjusted decree. It was also argued on behalf of the defendants that there was in fact no fresh decree passed upon the award proceedings. But that is immaterial if sch. II does not apply to execution proceedings, since the result of the award would be merely an adjustment of the original decree, and it was not necessary to pass any new decree at all. Indeed it is clear that an executing Court would not be entitled to pass a new decree.

8. Mr. Dixit next argues in support of the order of the Court below that even 'if we can regard the original decree as having been adjusted and the present proceedings as proceedings in execution of the decree so adjusted, there was nevertheless no adjustment recorded as such as required by Order XXI, Rule 2. It is true that it was not in terms recorded as an adjustment. But Order XXI, Rule 2, does not say how or where an adjustment is to be recorded. The order of the Court in the darkhast proceedings ' the award should be filed and a decree drawn up accordingly ' seems to be a sufficient record of the adjustment.

9. A point was taken on behalf of the appellant to the effect that even if the proceedings for arbitration were invalid, it was not open to the defendants to take the plea at this stage in view of the principles of estoppel and res judicata. There is no question that this is a point which could have been taken before, and the conduct of the defendants, who have up to this stage ail along admitted the award, prima facie estops them from denying it now. But it was contended on the other side that the question was really one of jurisdiction; and if the Court had no jurisdiction to refer the matter to arbitration or to accept the award passed in the course of the execution proceedings, then the mere fact that no objection upon this score of jurisdiction was taken at the Time cannot confer jurisdiction upon the Court. Similarly in the case of estoppel; conduct cannot confer jurisdiction where none exists: see Raghubir Saran v. Hori Lal 1931 I.L.R. 53 All 560 and Mahabir Singh v. Dip Narain Tewari (1932) I.L.R. 54 All 25, 25 F.B. But no question of jurisdiction was really involved, since, as I have said, all that the Court did in fact was to give formal permission to the parties to do what they were entitled to do without permission.

10. During the course of the execution an issue was raised as to the position of the judgment-debtor Bhagwan who had not signed the arbitration purshis, and in this appeal also it is contended on behalf of the respondents that the award is not binding upon him. It appears however from the record that this point, though raised in the issues, was dropped, and there is no reason why it should be raised again.

11. We think therefore that the lower Court was wrong in dismissing the darkhast. We allow the appeal with costs and direct that execution do proceed. The costs in the lower Court will be costs in the darkhast.


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