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The Andhra Mennonite Self-supporting Church Society Vs. Sundramma and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty;Arbitration
CourtAndhra Pradesh High Court
Decided On
Case NumberLetter Patent Appeal No. 217 of 1971
Judge
Reported inAIR1973AP19
ActsCode of Civil Procedure (CPC), 1908 - Order 23, Rule 3 - Order 21, Rule 2; Arbitration Act, 1940 - Sections 47
AppellantThe Andhra Mennonite Self-supporting Church Society
RespondentSundramma and ors.
Appellant AdvocateUpendralal Waghray, Adv.
Respondent AdvocateK.V. Rama Sarma, Adv.
Excerpt:
.....matter was referred to arbitrator - arbitrator appointed by authorised representatives of both parties - award was passed by arbitrator under order 23 rule 3 and accepted by representatives - appellant denied such acceptance - question raised was whether award can be treated as compromise or adjustment of suit under order 23 rule 3 - once award treated as compromise or adjustment of dispute it can be recorded under order 23 rule 3 - once parties have assented to award their consent is not necessary when court takes it up under order 23 rule 3. - - after considering the entire evidence, the trial court found that the reference to arbitration as well as the award given by the arbitrator was true. when once the reference made is valid reference and the arbitrator has made the award..........of the same property has to be deducted under section 14 of the limitation act. in that view, the suit was decreed for possession against the respective defendants on 31.3.1965.2. against the said decree, defendants 1, to 5 , 8 and 9 preferred c.c.c.a. no. 30 of 1965. after the passing of the decree and before the filing of this appeal in this court, the parties attempted to settle the matter. mr. issac representing the defendants authorised sri p. b. james to mediate and arrive at a final settlement. sri james, who was authorised as an attorney to arrive at the final settlement, appointed mr. k.c. devadanam as an arbitrator to into the land dispute. similarly, the plaintiff society, through its secretary sri d.s.jacob, appointed sri p. arnold for mediation and to make a final.....
Judgment:

Venkatarama Sastry, J.

1. The plaintiff is the appellant in this Letters Patent Appeal. This appeal arises out of the decision of our learned brother, Sriramulu, J., rendered in C.C.C.a. No. 30 of 1965. The said appeal was preferred by defendants 1 to 5, 8 and 9 in O.S.No. 57 of 1963 on the file of the court on the II Additional Judge, City Civil Court, Hyderabad filed by the appellant herein. The suit was for recovery of the possession of the suit property on the ground that the plaintiff Society was the owner of the suit property having purchased the same for the purpose of constructing a private church in the same. The defendants contested the suit. They contended that the property was purchased with the contributions made by all of them, that they entered in the possession of the respective plots and that they continued in possession from 1.4.1947. They claimed that the suit was barred by time. In the trial court, the plaintiff's title was established. In regard to the question of limitation, the learned trial judge thought that the period taken by their earlier litigation in respect of the same property has to be deducted under section 14 of the Limitation act. In that view, the suit was decreed for possession against the respective defendants on 31.3.1965.

2. Against the said decree, defendants 1, to 5 , 8 and 9 preferred C.C.C.A. No. 30 of 1965. After the passing of the decree and before the filing of this appeal in this court, the parties attempted to settle the matter. Mr. Issac representing the defendants authorised Sri P. B. James to mediate and arrive at a final settlement. Sri James, who was authorised as an attorney to arrive at the final settlement, appointed Mr. K.C. Devadanam as an arbitrator to into the land dispute. Similarly, the plaintiff Society, through its secretary Sri D.S.Jacob, appointed Sri P. Arnold for mediation and to make a final settlement with regard to the suit land. Mr. Arnold also appointed the same gentle man, Sri K.C.Devadanam. Thereafter the parties appeared before the arbitrator and led evidence. After considering the entire evidence that was placed and the submissions made before him, the arbitrator came to a decision and passed an award on 17.5.1965. Both Mr. James and Mr. Arnold representing the parties signed the award in token of their acceptance of the award. It was only later on that the appeal before the High court came to be presented on 11.6.1965. Pending this appeal, the respondents herein (defendants 1 to 6, 8 and 9) filed an application C.M.P.No. 8722 of 1965 under Order No. 23, Rule 3, Civil Procedure code praying this court to record the adjustment as evidenced by the award which was treated as a compromise and pass a decree in terms thereof as stated in the petition. The appellant-plaintiff filed a counter on 28.7.1960 and objected to the passing of a decree in terms of the award saying that he never gave his consent. This petition was argued before out learned brother along with the appeal. The appellant-plaintiff objected to the truth of the compromise and also the validity thereof. He questioned the validity on the ground that all the defendants did not agree to the award itself. He also relied upon the proviso to Section 47 of the Arbitration act which reads as follows.:

'provided that an arbitration award otherwise obtained may with the consent of all the parties interested be taken into consideration as a compromise or adjustment of a suit by any court before which the suit is pending.'

The contention of the plaintiff before the learned Judge was that since the members of the Society had withdrawn their consent to the award at the time of considerations of the application for the passing of a decree in terms thereof, the court had no jurisdiction to pass a decree as prayed for by the defendants. The learned judge considered this aspect relying upon the earlier decisions of the Madras High court and of this court and came to the conclusion that the consent that is required is consent to the award and not consent at the time when the application under O,. 23, Rule 3 to record a compromise comes up for consideration. Since the truth and validity of the award were questioned by the appellant, the learned judge called for a finding from the trial court about that matter.

3. In pursuance of that order calling for a finding, the trial court submitted its finding on 28.7.1970. The parties who made a reference to arbitration and the arbitrator were examined and P. Ws. 1 and 2 and D.W.1. The award also was filed into court. The trial court gave a finding that the award was signed by P.Ws 1 and 2 in token of their having accepted the decision of the arbitrator and they signed the award with the endorsement ' agreed' and Exs. B-6 (a) to B-6 (c) were marked in that connection as the signatures of the parties concerned. Though P.W.2 gave evidence that he never consented and wanted to resile from the consent given to the award, the learned trial judge disbelieved his evidence saying that he was interested in supporting the plaintiff's case since he was evicted from the suit land in subsequent suit brought at the instance of some of the defendants. After considering the entire evidence, the trial court found that the reference to arbitration as well as the award given by the arbitrator was true. Regarding the validity of the award, the only ground upon which it was attacked was that all the defendants were not parties to the reference. This was answered by the trial court by saying that the 8th defendant, who was a party to the reference, was the power-of-attorney holder on behalf of all the defendants and the other defendants did not question his authority to make a reference to the arbitrator. In that view, the learned trial judge gave a finding on 28.7.1970 to the following effect:

'Thus I find that the award dated 17.5.1965 given by D.W. 1 Devadanam is valid and true and that it has been duly accepted by P. Ws. 1 and 2, representing the plaintiffs and defendants.'

After the receipt of this finding, the plaintiff filed objections. Our learned brother has considered all the objections and has ultimately come to the conclusion that the award which has been held to be a valid one was consented to by all the parties, and that it can be regarded as an adjustment of the suit under Order 23, Rule 3, Civil procedure code. In that view, our learned brother has directed that the award be regarded as an adjustment of the suit and the appeal be decreed in terms of the award. The decree of the trial court was accordingly set aside. It is against this decision of our learned brother that this Letters Patent Appeal has been filed by the plaintiff.

4. Mr. Upendralal Waghray, the learned counsel appearing for the appellant, raised before us two main contentions; firstly, that the Secretary of the Society, who appointed Mr. Arnold to make a reference has no authority to represent the plaintiff-institution; and secondly, under the proviso to Section 47 of the arbitration act, the consent that is required is the consent at the time of the filing of the compromise into court and the consideration of the said compromise by the court and not any anterior consent given to the award by any one of the parties. We will consider the validity of these contentions seriatim.

5. Regarding the first contention, it may be noted that the suit itself was filed by Sri D. S. Jacob representing the plaintiff institution. The plaintiff described the plaintiff as follows:

' The Andhra Mennonite Self Supporting Church Society, through the Secretary D. S. Jacob, Son of Sangappa, aged about 44 years, occupation Government Service, resident of Musheerabad, Hyderabad, Andhra Pradesh'. It was he that got the decree for the plaintiff. It was he who authorised Mr. Arnold to make a reference and also it was his representative Mr. Arnold, who accepted the award by endorsing on it as ' agreed' before the arbitrator and signing the same. We also told that he is the same gentle man who gave vakalat to Mr. Waghray, that he is still on record and that he has not been removed from his position as Secretary of the plaintiff-institution. In these circumstances, the contention of the learned counsel that the Secretary had no authority to enter into a compromise cannot be countenanced. We may also mention that the plaintiff-institution is represented by the same person as the appellant. There is no evidence on record that that his authority to file the suit and to carry on further proceedings till now has in any way been restricted or withdrawn or that there is anything in the Articles of association of the said institution forbidding the Secretary from making a reference to arbitration or from having an award in respect of the subject-matter in dispute. In these circumstances, we reject the contention of the learned counsel for the appellant.

6. Regarding the second contention, the same was considered by our learned brother. The learned judge relied upon some of the decisions of the Madras High court, one decision of the Patna High court and another decision of the Rajasthan High court. For appreciating this argument, it is necessary to read Section 47 of the Arbitration act.

' Subject to the provisions of Section 46, and save in so far as is otherwise provided by any law for the time being in force, the provisions of this act shall apply to all arbitrations and to all proceedings thereunder: Provided that an arbitration award otherwise obtained may with the consent of all the parties interested be taken into consideration as a compromise or adjustment of suit by any court before which the suit is pending.'

Now there is no dispute that the reference to arbitration was made after the suit was decreed and before the appeal was filed. Therefore, the provisions of law applicable are sections 3 - 19 of the Arbitration act. This is not an arbitration reference made when the matter was pending either in the trial court or in the appellate court. The parties who have made the reference to the arbitration were fully competent to make the reference at that juncture and no intervention of the court was necessary. When once the reference made is valid reference and the arbitrator has made the award after examining the parties and their evidence, and when once all the parties have signed their assent to that award, it is clearly a case where the parties have agreed to compromise the subject-matter of the dispute notwithstanding the decree of the court in the manner suggested by the award. When once the parties agreed to abide by the terms of the said award, it amounts to a compromise of the entire dispute pending between the parties.

7. The learned counsel for the appellant argues that the filing of an appeal subsequent to the award shows that even the defendants did not want to abide by the award and therefore it is a case where the defendant also have not consented to the award. We cannot accede to this contention. It has been explained in the affidavit filed in support of the petition for recording the compromise that they could file it only on that date after getting a copy of the award, that they had to file the appeal on 10.6.1965 and obtain stay of the Lower court's decree as the plaintiff was attempting to execute the decree, and that the settlement arrived at between the parties before the arbitrator was binding on the both the parties. Therefore we do not think that the mere filing of the appeal by the defendants before filing any application for recording the compromise would in any way affect the compromise would in any way affect the validity of the binding nature of the award.

8. Now the only question is whether the consent to the award should be regarded as a consent given to the compromise itself or whether there should also be a consent to its terms at the time when the court takes up for consideration the application under O. 23, R. 3, C. P. C. On this question, we are bound by the Full Bench decision of the Madras High court in Abdul Rahman v. Muhammad Siddiq, : AIR1953Mad781 (FB) in which it was decided as follows:

'we are accordingly of opinion that under the proviso to Section 47, an arbitration award obtained otherwise than in proceeding taken in accordance with the act cannot without more be recognised as a compromise or adjustment of the suit; that no decree can be passed thereon under the provisions of Order 23, R 3; and that the decision in Arumuga Mudaliar v. Balasubramania Mudaliar, AIR 1945 Mad 294 should be overruled. But, if after an award is made, the parties thereto agree to accept it, that will be a compromise and a decree based thereon could be passed under Order 23, Rule. 3. '

9. This full bench considered the validity of the earlier decisions of a Division Bench in AIR 1946 Mad 294, rendered by Leach, C. J., and Lakshmana Rao. J., holding that an agreement o accept a future award can be treated as a compromise in the suit. For this proposition, they relied upon an earlier full Bench decisions of the Madras High court in Subbaraju v. Venkata Rama Raju, AIR 1928 Mad 1025 = ILR 51 mad 800 (FB). This decision which was rendered at a time when the arbitration act of 1940 was not in force was not accepted as correct by the full Bench in Abdul Rahman's case, : AIR1953Mad781 (FB). The full bench followed the view expressed by the Calcutta High court in Dekhari Tea Co. Ltd., v. India General Steam Navigation co. Ltd., AIR 1921 Cal 238; Amar Chand Chamaria v. Banwari Lal Rakshit, AIR 1922 Cal 404; Guimoni Dasi v. Rarini Charan, AIR 1927 Cal 887 and Rohini Kanta v. Rajani Kanta, AIR 1935 Cal 643 for coming to the conclusion that the consent that is required is a consent to the award itself and not merely a consent to an arbitration reference and an agreement to abide by it. Their Lordships also stated that the proviso to Section 47 was enacted only to bring into line the view expressed by the Calcutta High court.

10. In view of the above decision of the full Bench, it is clear that, in considering whether an award can be treated as a compromise or adjustment of a suit under Order 23, Rule 3 , Civil Procedure Code, what the court has to see is whether there is a consent to the reference and also to the award. The full bench, though it considered the earlier case law on the subject till that time, did not say specifically that there should also be a consent of third occasion i.e., consent to the compromise at the time of consideration of the application under O. 23, Rule 3, Civil Procedure Code by the court. We also feel that such a consent is not necessary because when once the award is treated as a compromise or adjustment of a dispute, that compromise or adjustment can be recorded under Order 23, Rule 3 . If a party says that there is no such consent or that his consent was procured in evil or vicious circumstances, it is for him to establish that fact in a separate proceeding. The court cannot insist upon the consent being there throughout till the order recording the compromise is effected. In the matters arising under the proviso to section 47 , it is not necessary that there should be a consent till the date of recording the compromise under Order 23, Rule 3. We do not think that the legislature had that view while enacting the proviso to Section 47. If that should be the effect of the proviso, it would be open to any party to resile from it and make any such compromise or adjustment ineffective or useless. We do not think that there is any necessity for proving any consent at the time of recording the compromise.

11. The Full Bench decision in Abdul Rahman's case : AIR1953Mad781 (FB), has been followed by a Division Bench of this court in Laxminarayana v. Venkata Subbaiah AIR 1958 Andh Pra 679 consisting of Subba Rao, C.J., and Srinivasachari J. We may also mention that this decision, in penultimate paragraph says as follows:

'If the award is agreed to after it given, it operates as an adjustment.'

The ratio decidendi of this case also supports our view. These two cases were followed by Umamaheswaram J., in Salima Bibi v. Md. Ibrahim, AIR 1962 Andh Pra 123 who held as follows:

'The proviso to Section 47 does not state when the consent of the parties should be obtained. If before the filing of the award, all parties signed on it the court is entitled to take it into consideration as a compromise or adjustment of a suit within the meaning of Order 23, Rule 3, C. P. C.

It is not necessary that the party should consent to the award at the time when the compromise petition is taken up for consideration by the court.

It does not matter whether the consent is signed outside the court or before the court.'

The learned judge also considered the two decisions in Zeauddin v. Abdul Rafique, : AIR1952Pat66 and Phool Narain v. Madan Gopal AIR 1955 Raj 162 taking the opposite view. The learned judge dissented from the view expressed in those decisions and followed the Full Bench decision in Abdul Rahman's Case, : AIR1953Mad781 (FB), which was binding upon him. Though a contrary view was taken by the Patna High court in Zeauddin's case, : AIR1952Pat66 , a different note has been struck by a single Judge of the very same High court in a recent decision in Rameshwar Lal v. Mangi Lal : AIR1964Pat374 wherein the learned judge preferred to follow the full Bench view in Abdul rahman's case, : AIR1953Mad781 (FB). In view of the conflict in the aforesaid two decisions of the Patna High court, we do not think that we can prefer to follow the view of the Patna High court in preference to that expressed in Laxminarayana's case AIR 1958 Andh Pra 679 and Salima Bibi's case, AIR 1962 Andh Pra 123. The decision in Phoolnarain's case, AIR 1955 Raj 162 relied upon by the learned counsel for the appellant also dies not, in our opinion , represent the correct view.

12. We may also state that a learned Single Judge of the Gujarat High court in Modi Narandas v. Shah Jamnadas, : AIR1969Guj76 has also taken the same view as we have now expressed and preferred to follow that view in preference to the view enunciated by the Patna High court in Zeauddin's case, : AIR1952Pat66 .

13. In view of the above authorities, we are convinced that it is not necessary for recording an adjustment of a suit under Order 23, Rule 3, C.P.C. that the parties to it should signify their assent to the award even at the time of recording the compromise and that the view of the learned judge in this respect taken in the appeal is correct and has to be sustained.

14. Mr. Waghray, the learned counsel for the appellant, next submits today that the matter comes under Order 21, Rule 2, C.P.C. and the adjustment of the dispute not having been reported to the court in execution within the time permitted by Order 21, Rule 2, it is not open to the court to treat it as an adjustment of the decree and record it under Order 23, Rule 3, C.P.C. we are afraid we cannot subscribe to this proposition. Order 21, Rule 2 speaks of payment out of court to a decree-holder executing decree. That stage is only after the decree and when the matter is pending in execution. Order 23, Rule 3 applies to case where the suit has been adjusted wholly or in part by any lawful agreement or compromise, or where the defendant satisfies the plaintiff in respect of the whole or any part of the subject matter of the suit in which the case the court shall order such agreement, compromise or satisfaction to be recorded and shall pass a decree in accordance there with so far as it relates to the suit. Necessarily Order 23, Rule 3 is attracted where the decree has not become final. In the instant case, the appeal having been preferred against the decree of the trial court, the matter is pending in appeal having been preferred against the decree of the trial court, the matter is pending in appeal and it is only the appellate court that would pass a decree finally in the suit. Before such a decree is passed, the proper provision of law that could be attracted to a case of this type is Order 23, Rule 3 and not order 21, Rule 2. Moreover, order 23, Rule 3 also speaks of any satisfaction to be recorded. As this is not a case coming in execution, we do not think that Order 21, Rule 2 is attracted.

15. The learned counsel relied upon a decision of the Supreme Court in Moti Lal v. Md. Hasan Khan, : [1968]3SCR158 . Their lordships have held that order 23, Rule 3 does not apply to execution proceedings in view of order 23, Rule 4. Independently of order 21, Rule 2 and Section 47 enable the executing court to record and enforce such a compromise in execution proceedings. That case related to a compromise in execution proceedings whereby the judgment debtor agreed to pay interest at a rate higher than the one provided by the decree and their Lordships had only to consider that situation. There is nothing in that decision which supports the appellant's contention that even after an appeal is filed, the parties should resort to Order 21, Rule 2 as in the case of an adjustment or satisfaction of a decree also in the case of an adjustment of a suit under order 23, Rule 2, C. P. C. We , therefore find no merit in this submission.

16. In the result, the judgment and decree of the Learned Single Judge are affirmed and this Letters Patent Appeal is dismissed. In the place of the decree of the trial court, there will be a decree as per the award passed by the arbitrator. In the circumstances of the case, we direct the parties to bear their own costs in this Letters patent Appeals.

17. Appeal dismissed.


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