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Sahadeo Vs. Shanta Prasad Misra - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAllahabad High Court
Decided On
Case NumberCivil Revn. No. 587 of 1971
Judge
Reported inAIR1974All48
ActsCode of Civil Procedure (CPC) , 1908 - Order 23, Rule 3; Arbitration Act - Sections 47
AppellantSahadeo
RespondentShanta Prasad Misra
Appellant AdvocateSanktha Rai, Adv.
Respondent AdvocateR.S. Singh, Adv.
DispositionRevision dismissed
Excerpt:
.....act, 1940 - arbitration award by itself does not amount to a compromise or adjustment of a suit - agreement or compromise can only be where the parties themselves agree to a settlement - all the parties must consent to the terms of the award after arbitrator gave the award - held, terms of the award not consented after the award was given by the arbitrator could not amount to settlement of dispute through compromise. - cantonments act[c.a. no. 41/2006]. section 346 & cantonment fund (servants rules, 1937, rules 13, 14 & 15: [h.l. gokhale, ag. cj, p.v. hardas, naresh h. patil, r.m. borde & r.m. savant, jj] jurisdiction of school tribunal constituted under maharashtra employees of private schools (conditions of service) regulations act, (3 of 1978) held, school run by the..........the matter came up before the court the plaintiff refused to give consent to the decision of the suit in terms of the award.2. at the hearing of the matter it was contended by the defendant that the award should be treated as a settlement of the dispute within the meaning of order 23, rule 3 of the code of civil procedure and a decree be passed under that provision. the trial court did not accept the contention because the plaintiff had not given bis consent to the decision of the suit in terms of the award. it held that without such consent the dispute could not be deemed to have been settled between the parties out of court. the application was accordingly rejected and the suit was directed to be proceeded with. the defendant went up in appeal. the appellate court took the same view.....
Judgment:
ORDER

Hari Swarup, J.

1. This civil revision has been filed against the order passed by the Additional District Judge dismissing the appeal against the order of the trial Court dismissing the defendant's application for deciding the suit in terms of an alleged compromise. In the suit, an application (20-C) was moved on 7-9-1970 by the parties stating that talks of compromise were going on between the parties and they had already appointed an arbitrator (Panch). It was further stated that as the arbitrator was likely to take some time in giving his award the hearing of the case be adjourned and later on the suit may be decided in terms of the award to be given by the arbitrators (Panchon). On 20-10-1970 the defendant moved an application with a prayer that the suit may be decided in terms of the award given by the arbitrators. The plaintiff filed objections to the award and contended, inter alia, that the arbitrators had mis-conducted themselves as well as the proceedings. When the matter came up before the Court the plaintiff refused to give consent to the decision of the suit in terms of the award.

2. At the hearing of the matter it was contended by the defendant that the award should be treated as a settlement of the dispute within the meaning of Order 23, Rule 3 of the Code of Civil Procedure and a decree be passed under that provision. The trial Court did not accept the contention because the plaintiff had not given bis consent to the decision of the suit in terms of the award. It held that without such consent the dispute could not be deemed to have been settled between the parties out of Court. The application was accordingly rejected and the suit was directed to be proceeded with. The defendant went up in appeal. The appellate Court took the same view as was taken by the trial Court. It also held that the award, not having been made in accordance with the provisions of the Arbitration Act, could not be given effect to as an award, and without the consent of the plaintiff could also not be regarded a compromise within the meaning of Order 23, Rule 3, Civil P. C. The defendant has raised the same pleas in the Revision. According to the learned counsel for the applicant the parties should be deemed to have settled their dispute out of Court in terms of the award within the meaning of Order 23, Rule 3 of the Code of Civil Procedure. The submission is that by stating in the application (20-C) D/- 7-9-70 that the suit may finally be decided in terms of the award that may be given later on, the parties should be deemed to have settled their dispute by a compromise in terms of the award that was to follow. There is no merit in the contention.

3. Obviously, the award, having not been made in accordance with the provision of the Arbitration Act, could not as such be treated to be a valid award to form the basil for the decision of the suit The only provision in the Arbitration Act which permit the decision, of the suit on the basis of an award is Section 47, which reads as under:

Section 47:-- 'Subject to the provision 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 proceeding 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 a suit by any Court before which the suit is pending.'

This proviso leaves no doubt that an arbitration award by itself does not amount to a compromise or adjustment of a suit. If it were not to be so, the proviso would not have required the obtaining of fresh consent to the award. Order 23, Rule 3 of the Code of Civil Procedure states:--

'Where it is proved to the satisfaction of the Court that a 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, the Court shall order such agreement, compromise or satisfaction to be recorded, and shall pass a decree in accordance therewith so far as it relates to the suit.' The essential ingredient of Rule 3 of Order 23, Civil P. C. is the agreement or compromise. An agreement or compromise between the parties can only be where the parties themselves agree to a settlement. It requires a consensus of mind of the parties themselves. In Webster's New International Dictionary the word 'agreement' in legal terminology is stated to mean:

'A concurrence in an engagement that something shall be done or omitted; an exchange or promise, mutual understanding, arrangement, or stipulation.' 'Compromise' according to the Concise Oxford Dictionary means:

'Settlement of dispute by mutual concession'.

Neither 'agreement' nor 'compromise' contemplates the imposition on parties a decision by somebody else. The terms do not include within their ambit an arbitration award howsoever secured. Where the settlement is not by voluntary act of the parties themselves, i.e., through the application of their own minds, it cannot be an agreement or compromise entered into by the parties. If a matter is left to be decided by a third person, then his decision would not be an agreement or compromise between the parties, but would be an award. Order 23, Rule 3, Civil P. C. does not contemplate an 'award' in the terminology of 'agreement orcompromise'. It is for this reason that proviso to Section 47 of the Arbitration Act was enacted. Similar was the view taken by a Full Bench of this Court in the case of Moradhwaj v. Bhudar Das : AIR1955All353 . It was observed: 'The words 'with the consent of all the parties interested' are intended to resolve the conflict that prevailed before the Act came into force. These words obviously have reference to the award. All the parties interested must consent to the 'award' being given effect to. Where they do not so consent, the award cannot be taken into consideration as a compromise or adjustment. The consent of the parties to the reference merely and not to the award can by no stretch of imagination be deemed to be a consent to the award itself as actually made.'

4. The application dated 7-9-1970 shows that the parties were contemplating a compromise and for that purpose had agreed to refer the dispute to arbitration and after the award was to be given, the suit wag to be decided in terms of the award. If the law did not permit the Court to decide the suit in terms of the award obtained in a manner not provided by the Arbitration Act, mere agreement of the parties that the suit be decided in terms of the award will not confer any power on the Court to decide the suit in terms of the award. The suit can be decided in terms of such an award only by treating it as a compromise or adjustment, but that too cannot be done unless both the parties consent thereto. This requirement about consent is embodied in the proviso to Section 47 of the Arbitration Act. The agreement mentioned in application No. 20-C could not amount to the consent to the award within the meaning of the proviso to Section 47 of the Arbitration Act, or even otherwise, because the consent had to be consent to the decision contained in the award and the same could not possibly be given before the award had been made. Consent contemplated by the proviso to Section 47 is the consent given after the award to the terms of the award and not the prior consent to be bound by the award. This was also the view taken by this Court in the case of : AIR1955All353 (supra). The award, not being consented to by the plaintiff after it was given by the arbitrators, could not be deemed to record the agreement or compromise between the parties and could not amount to a settlement of the dispute through compromise for the purpose of Order 23, Rule 3, Civil P. C.

5. Learned counsel for the applicant cited the following cases for establishing the proposition that there can be a compromise within the meaning of Order 23, Rule 3, Civil P. C. even in cases where the final settlement is reached not directly but through the intervention of a third person : Kedar Nath v. Badri Prasad : AIR1972All453 ; Saheb Ram v. Ram Newaz : AIR1952All882 ; Munshi Singh v. Ewaz Singh : AIR1952All890 ; Munnaluri Venkateswarlu v. Vaddula Narasi Reddy : AIR1961AP71 ; (Hakim) Bashir Ahmed v. Sadiq Ali, AIR 1929 Oudh 451; Mohammad Abdur Razaque v. Abdul Majid : AIR1957Pat656 ; Rameshwar Lal v. Mangi Lal : AIR1964Pat374 . These are cases where the Court had decided the suit either on the basis of special oath or on the basis of some specific material agreed by the parties to be taken as final basis for the decision of the dispute. All the cases cited were the cases in which the question was about the maintainability of appeal where a decision was given by the Court in the aforesaid circumstances and it was held that in such circumstances there was no right of appeal. Such cases can provide no authority for holding that an award given otherwise than in accordance with the provisions of the Arbitration Act, would be deemed to be a compromise within the meaning of either Order 23, Rule 3, Civil P. C. or the proviso to Section 47 of the Arbitration Act. None of the cases cited by the learned counsel dealt with the proviso to Section 47 of the Arbitration Act or its effect on the provisions of Order 23, Rule 3, Civil P. C. It is not necessary, therefore, to discuss the cases separately or in further detail.

6. The courts below thus have committed no error in refusing to decide the suit in terms of the award relied upon by the defendant. The revision, accordingly, fails and is dismissed with costs.


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