1. This matter arises in the following way : An appeal was filed in this Court on the 7th of April, 1922, on behalf of Rai Bahadur Ghaudhri Gajendra Singh against Srimati Durga Kumari, the relief sought by which was to set aside a decree of the Subordinate Judge of Moradabad, dated the 23rd of January, 1922, and the value of such appeal was stated at Rs. 73,841/10. On the 23rd of January, 1924, that is to say, nearly two years afterwards, an application was filed on behalf of the respondent to the above-mentioned appeal, which, it should be mentioned, was an Execution First Appeal, asking that the said appeal should be dismissed. The application did not in terms ask this Court to record an adjustment, or to decide any question under Order 23, Rule 3. The affidavit in support of it set out the fact that an agreement and what was called an award made under the said agreement, had been come to between the parties and alleged that the appellant in the said appeal had no right to continue the appeal. The appeal itself together with the application to which I have just referred, which was described by the office of the High Court as a micellaneous application in Execution First Appeal No. 118 of 1922, were connected and heard together before a Bench consisting of my two brothers, Mr. Justice Kanhaiya Lal and Mr. Justice Lal Gopal Mukerji. In an order, dated the 27th of June, 1924, which sets out very clearly the course of events and the authorities which have led to a difference of opinion between certain of the High Courts in India as to the applicability of Order 23, Rule 3, they expressed the opinion that the matter ought to be referred to a larger Bench for decision, and it happened that I myself was then acting in the capacity of Chief Justice, and on the 11th of July, 1924, I made an order directing the case to be finally disposed of by a Bench consisting of these two learned Judges and myself. It came before us on the 31st of July, 1924, when the point was taken that on a question of fact with reference to the so called award and payment, the evidence of the Collector, Mr. H.G. Walton, who was away on leave, was material, and the case was adjourned generally and has now come before us for final disposal with the addition of Mr. Walton's evidence. Speaking for my own part, I am not satisfied that any question of law arises at all. The agreement before us is such that upon general principles of law I am not satisfied that it is necessary to apply any provision of the Code. The provisions of the Code only apply to such proceedings as purport to be taken thereunder. It happens from time to time that things are done by the consent of parties without reference to any special provision of the Code. It also happens sometimes that the parties are governed by some general principle of law, analogous to a provision in the Code, which is not actually to be found in the Code. The most familiar illustration of that is where there has been a binding decision in interlocutory proceedings, in the course of a suit, and one of the parties seeks to question it at a later stage. The Privy Council have held that a decision between the parties in the course of a suit is governed by the principles of res judicata, independently altogether of the special provisions of Section 11 of the Code, and indeed there is no provision of the Code which applies to it. In this case the unfortunate dispute, which is sufficiently described in the previous orders of my brothers and dealt with in great detail by my brother Mr. Justice Mukerji in the judgment he has prepared, was settled by a solemn agreement entered into in writing and executed by the parties on the 10th of February, which is admittedly binding upon both of them unless there is something outside the agreement sufficient in law to destroy it, or to render it of no effect. By that agreement the appellant, who seeks to appeal in Execution First Appeal No. 118 of 1922, agreed for certain consideration therein set out, that he would get his application for permission to appeal to the Privy Council, which was then under consideration in the High Court, and his appeal in the suit for mesne profits, which was pending in the High Court, struck off, and that after the appeal and the application were struck off, he should pay to the present respondent the lady, the amount which might be determined by Mr. Walton, the Collector, on account of all kinds of mesne profits debts of the time of Kunwar Sardar Singh which are alleged to have become time barred expenses incurred in connection with mutation cases, which of course were on the revenue side, civil suits, application for permission, which, although it does not say so, is the application for sanction to prosecute the appellant which had been applied for by the said respondent against the appellant for having forged a will, a suit for mesne profits, criminal case and enquiries in connection therewith, High Court appeal, Privy Council appeal and appeal in the suit for mesne profits. The other party covenanted that she would accept the amount which might be determined by the Collector aforesaid on account of her demands, setting out the various heads under which she was making demands. In the event of these conditions not being carried out, that is to say, the amount determined not being paid, and the appeal and the application not being struck off, the agreement went on to provide that the lady's rights and decrees were not to become null and void. It is clear from this agreement that the striking off of the appeal and the payment of the demands determined by the Collector were concurrent conditions. That is to say, that actual date of the order of any Court withdrawing or striking the appeal off the list, would be of no importance. If the contracting party did not take the necessary steps to have his appeal struck off, the Court could do is for him on an application by his opponent as the Court could treat that as done which ought to be done. Certain arguments have been addressed to us as to the nature of the demands made by the lady, and as to the prospect of her being able to establish them either in a civil Court, or in any other Court, or in any other way as a matter of strict legal right. Such demands, which certainly cannot be complained of on the score of economy or moderation, are set out in the schedule to the agreement. If parties choose to submit their disputes informally to a mutual friend and to agree to accept and do respectively, whatever he decides, it is no business of anybody else that they choose to include claims or demands which knight not be recoverable in a Court of law, or which might be recoverable with great difficulty. The whole essence and meaning of such an agreement is to make an end of legal proceedings and to avoid further controversy.
2. In the course of argument before us by the appellant, who claims to go on with this appeal, an effort has been made supported by his affidavit, to show that the agreement was really provisional. That is to say, its performance on both sides was conditional upon an event which was then uncertain, namely, the withdrawal at the prosecution which had been begun against him, Gajendra Singh, for forgery. The case had been actually committed for trial and the date for the first hearing before the Sessions Judge had been fixed. There is no doubt that Gajendra Singh himself, and probably the Collector, would have been glad to see these proceedings abandoned or withdrawn. There is also no doubt that the lady, if she had been master of the situation and able to withdraw the case by the sole exercise of her discretion, would have been willing to have exercised the discretion for a price. So that if the matter were one of contract only, Gajendra Singh could have bought immunity from prosecution. But the matter was obviously not one of contract. Proceedings under Section 476, Cr.P.C. had been set in motion by the Civil Court itself and the decision as to whether they should be allowed to continue, rested not with her, nor even with the District Magistrate, but with the Local Government. In fact the sentence upon Gajendra Singh was one year, and the Local Government re-leased him after he had served for a month and a half. Hopes, however confident, and inducements, however strong, are not in themselves consideration for an agreement, and are only evidence when the learned Vakil called, circumstantial evidence pointing to the possibility of the existence of some condition precedent of the kind suggested. I can only say, after reading the evidence of the Collector, that I am satisfied that whatever operated upon the mind of Gajendra Singh in entering into this agreement, it was no part; of the contract between the parties that the execution of the agreement should be conditional upon the withdrawal of the prosecution. To my mind that condition in fact fails. A further suggestion is made that Gajendra Singh was not in fact a free agent, that is to say, that undue advantage was being taken by the lady of the position into which ha had got himself by committing forgery, and that she was in a position to dominate his will, and that the circumstances of the contract are such as to show that it was made by him under undue influence. I will set out as well as I can what are the facts upon which we are invited to arrive at this conclusion. Mr. Walton, the Collector, undoubtedly recommended to the Local Government that the prosecution should be dropped. He evidently thought that it was not in the public interest that it should continue that Gajendra Singh was a parson who had earned by meritorious conduct in the past a reputation in the neighborhood, and that if this unfortunate dispute with the lady came to an end, the matter might be quietly dropped. He was willing to pay and the agreement left it to Mr. Walton to decide how much the lady should get towards the costs which she had spent in obtaining sanction, and in attending the case for the prosecution before the Magistrate, and to is a just observation made by the learned vakil that a party does not as a rule voluntarily contribute towards the costs of his own prosecution unless at any rate that prosecution is withdrawn. Further, the case was adjourned from day to day and ultimately indefinitely, until the month of July no doubt by the order of some authority which had reason to believe that the possibility of a withdrawal was under consideration and there is the final observation of a Government official, I think the Legal Remembrancer, that the prosecution must proceed and that the Government had decided upon this course, even if it resulted in the re-opening of what was called the arbitration. The difficulty about this allegation to my mind is two fold. In the first place, in his affidavit filed in support of this application the appellant does not himself say that he was not a free agent, or that he entered into the agreement under undue influence, nor does he allege anything in the nature of undue influence, or any particular instance of it exercised by any particular individual at any particular moment, and, in the second place, I find it difficult to accept a case which sets up a charge of undue influence alleging that a party to an agreement was not a free agent, while at the same time it is contended, and some of the same material is cited in support of it, that he deliberately entered into a provisional agreement with a condition precedent that he should not be prosecuted. The conduct which is relied upon as indicating that he intended to enter into a conditional agreement seems to me inconsistent with the view that he was not acting as a free agent. I am satisfied that this agreement was absolute and unconditional, and that it was the result of the free will and contracting power of the appellant Gajendra Singh. I find myself unable to hold that there was no consideration for it. The lady was a decree-holder and she was executing her decree. She had claims which she was in a position to enforce in the execution Court. She had contingent rights, in the event of the appeals brought against her being unsuccessful, to receive costs already incurred in such proceedings. She had an alleged claim for damages in respect of a large number of bonds or documents of the late Sardar Singh which we call in England 'choses-in-action,' which she complains had been neglected and allowed to become time-barred by reason of the wrongful acts of her opponent and although she or her advisers did not take much pain to lay the material with regard to this before the Collector, yet to the extent to which material existed, or could be obtained by the machinery of the law in the course of a civil suit, she would undoubtedly have been entitled to recover damages against Gajendra Singh for such loss as she had suffered in that matter. Forbearance to sue and forbearance to take definite steps to enforce legal rights, have always been held to be adequate consideration to support an agreement, particularly an agreement, of this kind, where there are mutual considerations and both; parties are intending, and agree, to make an end of their dispute. On general principles of law, independently of any provision in the Code, I hold that this Court has an inherent discretion to decline to allow an applicant to prosecute an appeal the moment it is satisfied that the appellant by his solemn act and deed testified to by his signature, for what he considered adequate consideration, has expressly abandoned his right and undertaken to withdraw his appeal. To my mind to allow the appeal to go on under such circumstances would be giving effect to a breach 'of contract, and committing an injustice to the respondent, who is equally bound by the agreement, and would be1, on the part of the Court itself, pessimi exempli, suggesting that this Court had sanctioned and approved a deliberate departure from the solemn act land deed of the party appearing before it. Under these circumstances, according to my view this appeal, on the facts before us, ought, to be dismissed without reference to any of the decided cases. As the matter has been fully argued before my brothers on a previous occasion and before us, I do not hesitate to hold that whatever may be the state of the law under the Code with reference to a case where parties have submitted to arbitration the whole of their dispute arising in a particular suit without the intervention of the Court (which I may observe is not this case, the transaction proved before us seems to me to be an agreement, compromise and satisfaction. of the whole of the subject-matter in this appeal), that the appeal has been adjusted by this compromise and if we ware asked to do so, it seems to me that we ought under Order 23, Rule 3 to pass a decree in accordance with such compromise. The matter has been argued before us as though this Court had been asked to record such a compromise, I cannot find that there is any actual application before this Court asking it to record such compromise, but even if we are entitled to treat the case upon that footing, I am satisfied that the facts in this case bring it within this provision of the Code. I do not propose to consider the differences which have arisen in the various cases cited to us from different High Courts with regard to the difficulties in applying Rule 3 of Order 23. I agree in the main with the judgment in the case of Manilal Motilal v. Gokul Das Rowji A.I.R. 1921 Bom. 310. The agreement of the 10th of February before us is really the decisive factor in my judgment. The reference to Mr. Walton was only as secondary and consequential part of that agreement, though no doubt as regards the money a very important feature of it. It has been carried out, and whether you describe the machinery as an arbitration and award, or a reference, or a decision, or an opinion by a third person, seems to me unimportant. It has been carried out in every particular by both parties. It is merely ancient history, and the only thing outstanding is that in spite of his agreement to the contrary, and in spite of his having paid the money, which be agreed that he would pay, the present appellant has not struck out the appeal in accordance with his promise. I think we ought to dismiss the appeal and to direct it to be struck out with coats.
Kanhaiya Lal, J.
3. I agree generally with the view taken by my learned brother and wish to add a few observations regarding the facts which have given rise to the matter in controversy and the different aspects from which the question can be examined. It appears that Mt. Durga Kunwar was claiming certain pro-party, which had been left by her father, Sardar Singh, and her claim was opposed by Choudhry Gajendra Singh and his son Shambhu Singh on the strength of a will alleged to have been executed by Sardar Singh in favour of Shambhu Singh who was then a minor, In the suit filed by Mt. Durga Kunwar for the recovery of possession of that property, these was also a claim for mesne profits. She succeeded in her suit and got a decree for possession and mesne profits which were left, to be determined in subsequent proceeding. That decree was upheld by this Court. The mesne profits were subsequently adjudged at Rs. 73,841-10-0 on the 23rd of January, 1922. The present appeal was filed by Gajendra Singh and Shambhu Singh from that decree.
4. While that appeal was pending, the prosecution of Gajendra Singh was started under Section 476 of the Coda of Criminal Procedure. An application for leave to appeal to the Privy Council from the decree obtained by Mt. Durga Kanwar for the possession of the disputed property was also pending in this Court. On the 10th of February, 1923, the parties to the present appeal entered into an agreement by which they provided that the application for leave to appeal to the Privy Council from the decree obtained by Mt. Durga Kunwar for possession of the estate and the appeal filed by her from the decree adjudging the mesne profits at the figure above mentioned should be withdrawn and that the question of the amount of mesne profits to which Mt. Durga Kunwar claimed to be entitled should be determined by the Collector of Moradabad, who was appointed arbitrator for the purpose and for the settlement of certain other claims for costs and damages, which Mt. Durga Kunwar had put forward. The agreement provided that after the amount of the various claims put forward by Mt. Durga Kunwar was determined by the arbitrator the party made liable for the same should discharge it, and that until such discharge was made, the right of Mt. Durga Kunwar tinder her decree would remain unaffected. In other words, the agreement consisted of two parts, one of which provided for the withdrawal of the present appeal and of the application for permission to appeal to the Privy Council and the other was for the settlement of the disputed claims by the arbitrator. To that agreement was appended a schedule of the claims which were then said to amount to Rs. 2,72,255. The claim was subsequently reduced before the arbitrator to Rs. 1,55,000 exclusive of the expenses connected with the criminal proceeding, the exact amount of which was not then stated.
5. Gajendra Singh and Shambhu Singh were represented before the arbitrator by Mr. Jackson and Mt. Durga Kunwar by Mr. Quadri. On the 23rd of February, 1923, the arbitrator made an award by which he declared Mt. Durga Kunwar' to be entitled to the entire amount awarded to her by the decree which is now under appeal with interest thereon at 6 par cent., par annum besides certain costs incurred extra judicially in the previous litigation connected with the estate and that incurred in the committal proceeding. In regard so the debts due to Sardar Singh, which were stated to have become time barred owing to the negligence of Gajendra Singh, the arbitrator stated that in absence of any evidence as to the existence and value of those debts, ha would not at present award anything to Mt. Durga Kunwar on that account, but it was open to her to raise that question again, if she was so disposed, within three weeks. She did not however, raise that question again, and the award, as it then stood, became final. The total amount awarded was Rs. 1,26,743-5-3 including the amount of the decree now under appeal, and the arbitrator directed that Rs. 1,00,000 out of the said amount should be paid within a week and the remainder within 15 days from the date of the award, and that order was communicated to Gajendra Singh and She Counsel for the other side.
6. It is admitted that in pursuance of the above award Gajendra Singh made payments partly in March and partly in April 1923, in full satisfaction of the amount awarded against him and that Mt. Durga Kunwar subsequently withdrew that amount. The decree for mesne profits was thus adjusted and paid up.
7. The decree holder-respondent contends that in view of the agreement and the award, followed by the adjustment and payment aforesaid, the appeal is no longer maintainable. The reply of the judgment-debtors appellants is that the agreement was conditional on their criminal prosecution under Section 476 of Criminal Procedure Code being withdrawn, that it was without consideration that the award was incomplete and invalid, and that it could not be enforced except by a proceeding under Sen. II of the Criminal Procedure Code.
8. The agreement does not say that the withdrawal of the criminal prosecution was a condition precedent to the enforcement of the agreement or the award. The prosecutor was not the lady. She had applied for sanction to prosecute, but her application was refused. The prosecution was started under Section 476 of the Code of Criminal Procedure, and she could not have withdrawn it. Mr. Walton, the arbitrator, says that the withdrawal of the prosecution was not a condition precedent of the arbitration. He too could not have withdrawn it. At or about the time of making the award he has strongly recommended to the Government that the prosecution should be withdrawn, but the Government did not assent to it, and there the matter ended.
9. So far as the covenant contained in the agreement for the withdrawal of the present appeal was concerned, there can be no question that the agreement was, in view of the dispute then pending between the parties about the amount of the mesne profits, valid and for good consideration. The parties wanted to withdraw from the Court their dispute about the amount of mesne profits, and with that object they agreed that the appeal should be withdrawn, and the amount of the mesne profits determined by the arbitrator appointed by them. The arbitrator determined the amount according to the decree and that portion of the award cannot be seriously challenged. The respondent would have had to accept less, if a smaller sum than the amount of the decree had been awarded to her. That portion of the award is, therefore, good and binding.
10. The procedure provided by Schedule II is by no means the only manner in which an award can be enforced Section 89 of the Code of Civil Procedure provides that a reference to arbitration, whether by any order in a suit or otherwise, and all proceedings thereunder shall, save in so far as otherwise provided by the Indian Arbitration Act, 1899, or by any other law for the time being in force, be governed by the provisions contained in the second schedule. The other law above referred to is clearly the law other than the Indian Arbitration Act, which might be applicable to the matter. It does not exclude Order 23, Rule 3 or any other portion of the Code of Civil Procedure, applicable to such a proceeding. In fact, as indicated by Section 121, Order 23, Rule 3 is as if it were a part of the Code itself. The provisions relating to arbitration have only been relegated to a separate schedule for the sake of future legislative convenience with a view to their incorporation with the general law of arbitration, if it was hereafter necessary. Indeed, as pointed out in Mani Lal Moti Lal v. Gokul Das A.I.R. 1921 Bom. 310, the object of Section 89 clearly is to give effect to the provisions of Schedule II as if they had been enacted in the body of the Code, and it cannot be said that any material change of procedure, differing from what was in force prior to the enactment of the present Code of Civil Procedure, 1908, was really intended. Section 93 of the Code of Civil Procedure similarly lays down that save where otherwise expressly provided in the body of the Code or by any other law for the time being in force, an appeal shall He from every decree, and it can hardly be argued that the reference thereto 'any other law' is not intended to apply to any law other than the law which is referred to in the immediately preceding clause.
11. On behalf of the appellant reliance is placed on the decision in Amar Chand v. Banwari Lal A.I.R. 1922 Cal. 404 where it was held that a submission to arbitration under the second schedule during the pendency of a suit could not be enforced in the suit under the general law of contract. Section 39 of the Specific Belief Act, however, lays down that an award is for purposes of specific performance treated mutatis mutandis as a contract. If an arbitration is entered into in a pending suit without the intervention of the Court, the Court may, on the application of any party, stay the hearing of the suit and, on an award being subsequently made, act on the award if it finds that it is otherwise valid, treating it aa an adjustment of the suit. In Mani Lal Moti Lal v. Gokal Das A.I.R. 1921 Bom. 310 it was held that there was no reason why when an award was brought to the notice of a Court in a pending suit, it should not try the issue whether the award was not binding on the parties under the general principles of the Law of Contract by a proceeding under Order 23, Rule 3 of the Civil Procedure Code. The difference between such a procedure and an application under the second schedule to enforce the award is patent. Under the former procedure the Court will only take cognizance of that portion of the award, which forms the subject-matter of the suit, leaving the rest out of consideration. Under the latter the Court can, if it finds that the award is valid, enforce it in its entirety and pass a decree in its terms. In other words, the failure to adopt the procedure provided by Schedule II deprives a party of his right to claim the advantages which that schedule fives.
12. It does not deprive him of his right to enforce the contract embodied in the award otherwise, unless the subject-matter of the reference has meanwhile been disposed of by suit.
13. It may further be mentioned that the award so far as it relates to the decree now in question has been complied with and the entire money payable under the decree has been deposited by the judgment-debtors concerned and accepted by the decree-holder. In the words of Vaughan Williams, L.J. Doleman & Sons v. Ossett Corporation (1912) 3 K.B. 257 the award is now an executed award and must be treated as good so far as it operates as a complete-accord and satisfaction of the decree under appeal. It makes no difference whether such a settlement is a direct settlement between the parties themselves or made by means of a third person to whom the party has referred the dispute after suit for arbitration. The payment was-not made under protest. The appeal, therefore, ought to fail and to be dismissed with costs.
14. I find myself in the unfortunate position of dissenting from my learned brothers.
15. This is an application by the respondent for an order dismissing an appeal on the ground that the decree under appeal has-been adjudged and satisfied. The application is supposed to be one under Order 23, Rule 3 of the Civil Procedure Code. The history of the case briefly is this. One Sardar Singh died. The appellant, Gajendra Singh, claimed the estate on behalf of his son, Shambhu Singh, on the ground-that the deceased had given away the property to the latter under a will. The respondent. Mt. Durga Kunwar, is the-daughter of Sardar Singh. She claimed as her father's heir. The Civil Court held1 that the will propounded by Gajendra Singh was a forgery. The learned Subordinate Judge made a decree in favour o the respondent and this Court upheld it. Mesne profits were adjudged against Gajendra Singh as he had been in possession as a trespasser. The amount decreed is Rs. 73,000 and odd. It is the decree for mesne profits that is now under appeal. Gajendra Singh was prosecuted for forgery and while the case before the Sessions Judge was still pending, it appears, the parties, viz., Gajendra Singh and his son on one side and Mt. Durga Kunwar on the other, executed an agreement by which they purported to refer their entire dispute under certain conditions to the decision of the Collector of the district, viz., Mr. Walton. Mr. Walton decided' that a sum of Rs. 1,26,000 and odd should be paid by Gajendra Singh to Mt., Durga Kunwar, that Gajendra Singh and his son should withdraw the appeal now in question and their application for leave to appeal to the Privy Council against the decree in the main suit for possession of the property of Sardar Singh and that Gajendra Singh should pay up the money in this way that a sum of Rs. 1,00,000 should be paid up within a week and the balance in 15 days. It is common ground that the entire sum found due by Mr. Walton was put into the Government Treasury by Gajendra Singh and the money has been withdrawn by the respondent.
16. The appellants' reply to the respondent's application is, mainly, two fold. First, they contend that the reference to arbitration without the intervention of the Court which was seized of the appeal is not an adjustment of compromise by mutual consent within the meaning of Order 23, Rule 3 of the Civil Procedure Code and, secondly, that the reference to arbitration was made under the distinct understanding that the Government would withdraw the prosecution against Gajendra Singh and his son and that, therefore, the payment which was made under the same understanding was not an unconditional payment. It is further urged on behalf of the appellants that as the Government refused to withdraw the prosecution, the whole arrangement, viz., the reference to arbitration and the payment fell to the ground and could not be taken advantage of by the respondent.
17. The appellants did not file any written statement but filed an affidavit to explain the points taken up by them. The objections formulated by the learned Counsel in his argument on behalf of the appellants as to the invalidity of the reference and award were as follows:
(1) The arbitrator had no jurisdiction till the appeal and the application were withdrawn.
(2) The consideration and object for the reference were unlawful as they meant and implied a withdrawal of a criminal prosecution.
(3) The award was incomplete as the question of debts for which compensation was claimed by Mt. Durga Kunwar was left undetermined and,
(4) The award was not published.
18. Two main questions arise for determination by this Court, one of fact and the other of law. The question of law is whether, if the parties to an appeal make a reference to arbitration as to a matter being the subject-matter of the appeal without intervention of the Court, the award may be accepted by the Court as an adjustment by lawful agreement as a compromise by the parties even where the award is not accepted by one of the parties as binding on him. The question of fact is whether it was a condition precedent to the validity of the reference and the binding character of the award that the Government would withdraw the prosecution of Gajendra Singh and his son, and, if so, whether the award is invalid and the payment made thereunder cannot be accepted as a satisfaction by the appellants of the subject-matter of the appeal. I will take up the question of fact first.
19. As already indicated, the appellants case is that they had already bean committed to the Court of Session to stand a trial for forgery and it was on the distinct understanding that the prosecution would be withdrawn and the Magistrate would recommend the withdrawal of the prosecution that they agreed to an arbitration by the District Magistrate. Having regard to the facts disclosed by the affidavits of the parties and the testimony of Mr. Walton, I have not the least doubt that such was the case.
20. Before entering into evidence I may point out that a most unsatisfactory feature of this case is that we are going to decide most important questions of fact on mere affidavits. This remark of mine will have material bearing when I come to examine the question of law. If a reference had been made through the intervention of the Court, the submission to arbitration would have been done under the supervision of the Court and in objecting to the validity of the award, the parties would have been entitled to adduce oral evidence by examining witnesses in Court. As it is, we are called upon to decide most important facts on mere affidavits.
21. The affidavit filed on behalf of the appellants by one Ulfat Rai discloses that; the appellants, being anxious to avoid the criminal trial, had petitioned to Local Government for the withdrawal of the prosecution. On the 1st of February, 1923, the Government passed an order, the language of which is quoted in extenso in the affidavit. It said inter alia: 'The petition has bean forwarded to the District Magistrate of Moradabad for such action as he considers necessary and that any further communication op the subjects must be addressed to that authority.' The parties live in the district of Moradabad and that is why the reference was made to the District Magistrate of that place. This order was made on the 1st of February, 1923. The date fixed for the Sessions trial was the 31st of January, 1923. The trial did not take place on that day and was adjourned to the 3rd of February. When the orders of the Government were received, they were communicated to the learned Sessions Judge and the trial was adjourned sine die. On the 10th of February, 1923 the parties entered into the agreement of submission to arbitration. These facts alone would indicate that the learned District Magistrate was taking a keen interest on behalf of the appellants and this was reflected in the fact that the learned Sessions Judge too had bean persuaded to postpone the trial of Sessions case (always an important case) sine die. These facts would easily induce any person against whom serious criminal charges ware pending, much less to mention men of position as the appellants ware, to come to any terms whatsoever to escape the prosecution. If on the top of these circumstances we look to the agreement of submission, no doubt would be left in the mind as to the reason for that agreement. By this agreement which is dated, as already stated, the 10th of February, 1923, the appellants undertook to withdraw, at once, their application pending before this Court for permission to appeal to the Privy Council against the decree affirming the Subordinate Judge's decree awarding possession of the estate to the respondent. The appellants agreed So withdraw at once the present appeal. They agreed to pay whatsoever might be found payable by Mr. Walton on account of a number of claims amounting to the large sum of Rs. 2,52,000 and odd preferred by the respondent. The appellants agreed, unconditionally, to give up certain properties which could not be successfully claimed by Mt. Durga Kunwar on account of the operation of Order 2, Rule 2 of the Civil Procedure Coda. It appears that Mb. Durga Kunwar had omitted to claim these properties in her suit for possession against the appellants and accordingly she could not bring a fresh suit for these properties. As against all these agreements on the part of the appellants, the respondent Mt. Durga Kunwar, agreed to accept the decision of Mr. Walton as to the several claims she was putting forward. She undertook to give up nothing except such part of her extravagant and untenable claims as Mr. Walton might disallow. She knew that as to many of these claims she could get no relief in a Civil Court.
22. The position was, therefore, this that the appellants were to give up their right of appeal and thereby allow the decree for mesne profits amounting to Rs. 73,000 and odd to become final. They ware to give up property which the lady, Durga Kunwar, could not recover in any Court of law. The appellants agreed to give up their remedy or supposed remedy in the Privy Council and they further agreed to pay anything for all sorts of claims, including such preposterous claims as the costs of their own prosecution, incurred by the respondent. I do not think that it requires much argument to see that the agreement of submission to arbitration was an entirely one sided one, the advantage lying entirely on the side of the respondent.
23. If we examine the award we shall sea that the respondent got the entire amount of mesne profits decreed to her, with further interest. She got the costs she incurred in prosecuting the appellants and she got further costs to the amount of Rs. 30,000 with an addition of 50% for her worries, etc.
24. Now, it does not require much persuasion to see that the whole affair was a one-sided one, all the advantages lying with the respondent. What could then have been the reason for all this transaction? My clear answer is that the parties understood and the learned arbitrator himself understood that all this was going to be done for the sake of settlement, not only of the civil rights of the parties, but also of the criminal prosecution.
25. The arbitrator, who was examined on commission, was asked if it was a condition precedent to his arbitration that the prosecution of the appellants should be withdrawn. He replied : 'it was not to be dependent on the withdrawal of the criminal prosecution. So far as I know Mt. Durga Kunwar was entitled to enforce the award even if the prosecution was not withdrawn.' He further says: 'It is not correct to say that the consideration of the award was the withdrawal of the criminal prosecution.' I consider these statements of Mr. Walton to be nothing more than an opinion. From his own evidence I gather that it was intended to settle not only the civil but the criminal affairs. It was never intended that the civil dispute should be settled even though the criminal dispute (prosecution of one party by another) should remain unsettled. The learned Magistrate says : 'While the matter was in the Civil Court I and my predecessor-in-office made attempts to settle the dispute. The idea was if the dispute was settled it is possible to have the criminal proceedings withdrawn. I told the parties that if the matter went to the High Court, criminal proceedings would certainly be ordered whereas if the matter remained in the hands of the district authorities they might be avoided.' Then the learned Magistrate says that he did see a copy of the Government Order No. 393 of the 1st of February, viz., the order which referred the appellants to the District Magistrate of Moradabad, a portion of which has already been quoted above. Then Mr. Walton says : 'It was certainly understood by the parties and myself that it was wished to have the criminal proceedings withdrawn.' Again he says : 'Referring to the respondent I believe that she wished to take advantage of the position he was in, owing to the criminal proceedings'. Then the witness says: 'I wrote to the Government at about the time of making the award strongly recommending the withdrawal of prosecution of Chaudhri Gajendra Singh'. Then the learned Magistrate says: ' If Mt. Durga Kunwar said that the arbitration is entirely unconnected with criminal proceedings, her statement is not true.'
26. To my mind, the quotations from the learned District Magistrate's deposition are enough to show that the appellants entered into the submission with the sole view of the withdrawal of the prosecution. This would be made still clearer by the letter of the Government addressed to the District Magistrate on the 3rd of July, 1923. The Sessions trial, that had been put off sine-die, was still pending when this letter of the Government was received. A copy of the letter is on the record and the following is to be found in It : 'The Government refuses to sanction (the withdrawals even if this results in the arbitration award being re-opened'. When we remember that Mr. Walton says that-he had strongly recommended to the Government the withdrawal of the prosecution, we can easily see that it was in reply to his letter that the Government said that they did not care even if the award had to be re-opened if the prosecution went on. Putting two and two together, Mr. Walton must have indicated in his letter to the Government that a. non-withdrawal of the prosecution would result if the futility of all his efforts to settle the other disputes between the parties and that the result of the non-withdrawal of the prosecution would be the setting aside and the re-opening of the award After this, speaking for my self I would not require any further persuasion to come to the conclusion that the parties and even Mr. Walton believed that that result of the non-withdrawal of the prosecution would be that the award would fall, to the ground. My conclusion, therefore, is that the appellants are right in their plea that the submission and the award have become void because it was a condition precedent to their validity and binding character that the prosecution should be withdrawn.
27. We may consider the position in a slightly different light. Even if we say that the withdrawal of the prosecution was not a condition precedent to the validity of the submission and the award, we can certainly say that the submission is an agreement which was obtained by exercise of undue influence. There is some amount of inconsistency between the two pleadings, viz., 'the withdrawal of the prosecution was a condition precedent' and 'the submission to arbitration was influenced unduly'. But I do not think that it is not open to a party to plead like this in the alternative.
28. I have already shown that the advantages to be derived from the reference to arbitration were entirely one-sided. It is the case that the respondent - the prosecutrix - was in a position to dominate the will of the appellants. It is common ground that the respondent asked for permission to prosecute the appellants and when her application was refused, she appended to the document of submission, the respondent claimed two items, one of Rs. 772 and the other of Rs. 858 on account of these two applications. Then, it is clear that she herself and her people were to supply the evidence for the prosecution of the appellants. In the circumstances, she was clearly in a position to dominate the will of the appellants. The advantages due to the agreement of submission being almost entirely in favour of the respondent, the law would presume that the agreement for submission was influenced unduly, vide Section 16 of the Contract Act. The respondent has shown nothing against the presumption thus raised against her. I would, therefore, be prepared to hold that the agreement to submit to arbitration is not binding on the appellants. It would follow taht the award also is not binding on them.
29. In the view I take of the agreement of submission and the award it is not necessary for me to consider the other grounds on which the award is sought to be impeached. But it is desirable to mention briefly the contentions raised. One contention is that the award was incomplete because the question of debts, said to have become time barred owing to the trespass committed by the appellants over the property of the deceased Sardar Singh, was left undetermined. I do not think this contention is sound because the award simply said that if the matter was to be re-agitated, evidence was to be adduced in three weeks. If the respondent did not want to re-agitate the matter decided against her, certainly it was no duty of hers to adduce evidence.
30. The next point is that the award was not published. It is conceded that as soon as the award was made an order was issued to the appellants by the District Magistrate directing them to pay up a sum of Rs. 1,00,000 within one week and the balance in two weeks. This would be a sufficient publication of the award.
31. The third point is that the object of the submission was that the prosecution should be withdrawn. I have already dealt with the question and have coma to the conclusion that it was a condition precedent to the validity and the binding character of the submission and the award that the prosecution should be withdrawn. But the withdrawal was to be by the Government themselves and it was never contemplated that the respondent should do anything illegal to stifle the prosecution. In the circumstances I do not think that this ground will hold good.
32. To summarise. On the question of fact I am of opinion that it was a condition precedent to the validity and the binding character of the submission and the award that the Government should withdraw the prosecution. It being a fact that the prosecution was not withdrawn and one of the appellants was convicted and sentenced, the submission and the award cannot; be regarded as binding on either of the appellant. I am also of opinion that the submission was voidable on account of exercise of undue influence.
33. It was finally suggested on behalf of the respondent that what has been termed as reference or submission to arbitration and what has been termed 'award' were really no 'submission' and 'award ' in the strictest sense of the terms and that these am mere 'adjustment or compromise' within the meaning of Order 23, Rule 3 of the Civil Procedure Code. I may, however, point out that the parties and the arbitrator himself regarded that parties were making a reference to arbitration and Mr. Walton was constituting himself an arbitrator. On this point I would merely refer to the reference itself and to the award. In the award Mr. Walt an says that he had been asked 'to arbitrate on all outstanding questions' between the parties and that ha had obtained the sanction of the Commissioner under Article 1292 of the Manual of the Government orders. This article requires that where a Government officer wants to act as an arbitrator in any matter he should obtain the permission of his superior officer. The reply of the Government that they did not care if the award had to be re-opened also indicates that Mr. Walton regarded his act as that of arbitration. I would, therefore, summarily dismiss the suggestion that what was done was not a reference to arbitration nor was an award given.
34. Coming to the question of law. It appears that it is a difficult one and that the High Courts of Madras, Bombay and Calcutta have given different answers to the question. Before the examination of the authorities it would be useful to examine the law itself. It is to be found within the four corners of the Civil Procedure Code, the law of procedure in India.
35. There can be no doubt that the Civil Procedure Coda uses a recognised expression for the proceeding which involves a reference of their dispute by the contending parties to a third party for his decision. This has been described as an 'arbitration.' Nowhere in the Code has the word 'arbitration' been used in a sense coextensive with that of an adjustment of a dispute by lawful agreement or compromise. Section 89 of the Civil Procedure Code runs as follows:
Save in so far as it is otherwise provided by the Indian Arbitration Act, 1899, or by any other law for the time being in force, all references to arbitration whether by an order in a suit or otherwise, and all proceedings thereunder, shall be governed by the provisions contained in the second schedule.
36. In the second schedule, it will be noticed, provision has been made for three kinds of matter. Provision has been made is paragraphs 1-16 for reference to arbitration with respect to a matter, being the subject-matter of suit (and an appeal) where the reference is through the Court. Then paragraphs Nos. 17-19 relate to procedure to be followed when parties have agreed to refer their dispute to the arbitration of certain parties and one of the parties wants that the reference should be made under the supervision of the Court although no suit or appeal is pending before it. This is called the filing of an agreement for reference to arbitration in a Court. The remaining paragraphs in the Schedule II refer to the state of affairs where a reference has been made without the intervention of the Court and an award has already been obtained. In this last mentioned case, it is provided that, if any of the parties to the reference so desire, he may apply to the Court to have the award filed in Court so that a decree might be drawn up in terms of the award. It will thus be noticed that every possible case of an arbitration has been recognised and provided for. To repeat, there may be an arbitration pending a suit or appeal; then the reference should be through the Court. Then, there may be a reference without there being any suit pending. In such a case any party to a reference may apply to a Court to take up the conduct of the arbitration under its supervision. Lastly, when there has been an award after the completion of arbitration proceedings, any party may ask that the private award might be given the status of a Court by the award being filed and accepted in a Court of justice. Paragraph III, Sub-paragraph (2) of second schedule says that, where any matter has been referred to arbitration through the Court, the Court ' shall not, save in the manner and to the extent provided in this schedule, deal with such matter in the same suit.' This indicates that there is a complete ouster of the jurisdiction of the Court to decide the matter, referred to arbitration, except in so far as the orders of the Court may be necessary for the conduct of the arbitration. Then paragraph 15, Clause 2 lays down that where an award has become void or is set aside the Court shall make an order superseding the arbitration and in such a case shall proceed with the suit. This rule indicates where the jurisdiction of the Court, which was taken away by the provision of paragraph III, returns to it. Some such rules, as are embodied in paragraph III and paragraph XV of the second schedule, were necessary, for otherwise the two jurisdictions, viz., that of the Court and that of the arbitrator, were likely to overlap. It will thus be seen that the Civil Procedure Code provides a complete and self-contained set of rules by which a conflict of jurisdiction may be avoided.
37. Lat us now examine Rule 3 of Order 23 of the Civil Procedure Code. It runs as follows:
Where it is proved to the satisfaction of the Court that a suit has been adjusted wholly or in part by 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 or compromise or satisfaction to be recorded and shall pass a decree in accordance therewith so far as it relates to the suit.
38. The question is whether the words 'adjusted wholly or in part by any lawful agreement or compromise' can include an award obtained on a reference to arbitration without intervention of the Court. If we give the words their plain meaning, we must say at once that, an, 'award' is not meant by the plain and usual meaning of the words employed. An award is not the immediate result of an agreement or compromise. An award may be the ultimate result of an agreement, in so far as the parties have agreed to abide by the decision of a third party. But in that case we cannot say that the subject-matter of the dispute has been adjusted by an agreement by the parties. An award may be an adjustment of a dispute. But so is decision by a Court. But is an award an adjustment by an agreement? That is the question. The answer must be in the negative. Much less can we say that an award is the result of a compromise between the parties. As I have stated in an early part of this judgment, the law uses a particular expression, viz., 'arbitration' for the procedure by which parties agree to abide by the decision of a third party other than a Court. The legislature which uses the word arbitration, must have been aware of what the word meant. Can it be said that in using the words 'adjusted wholly or in part by any lawful agreement' the legislature intended to include the proceeding by way of arbitration? To an unsophisticated mind only one answer is possible, namely in the negative. The marginal notes of a section in a Code of law are certainly no sure guide to the real object of the legislature. But it can sometimes be looked at if there be any doubt about the meaning of the words used. In this particular case, to my mind, there is absolutely no ambiguity. Still if we look to the marginal note, we find the words used to express in brief the object of Rule 3 are 'compromise of suit'. The marginal note, therefore, indicates that the Rule 3 was to deal with what is generally known as a compromise of a suit. A compromise is the direct result of an agreement between the parties. the Rule 3, therefore, must be taken as directed only to cases where the parties have agreed that the Court should decide a matter between themselves in a particular way. Giving the words their plain meaning, an arbitration cannot come within the purview of Rule 3.
39. If, however, there were any doubt on the point, it is entirely set at rest by the language of Section 89, Civil Procedure Code already quoted. It lays down that (leaving out certain words in the beginning) all references to arbitration whether by order in a suit or otherwise and all proceedings thereunder shall be governed by the provisions contained in the second schedule.
40. If the preliminary words left out from the quotation do not indicate otherwise, it must be admitted that a reference pending a suit which is not made through the Court in which the suit is pending cannot be recognised by the Court. Now, the question is whether there is anything in the words 'save in so far as is otherwise provided by the Indian Arbitration Act, 1899 or by any other law for the time being in force which would exclude Order 23, Rule 3, Schedule (i), Civil Procedure Code.' We have nothing to do with the Indian Arbitration Act in the particular case before us. Then there remain the words 'or any other law' for the time being in force. It has been contended that 'any other law' referred to therein may indicate Order 23, Rule 3 of the Civil Procedure Code. This agreement, in my opinion, should not carry any weight whatsoever. The Schedule II and Order 23, Rule 3 are as much parts of the Code as Section 89 itself. In the circumstances, if the legislature meant that an exception was to be made in the case of Order 23, Rule 3, would not one expect that this would have been stated in clearer terms? Then, it has been argued that the words 'any other law' mentioned by Section 89 is not known to be any definite law that may have been in the mind of the legislature and, therefore, it is possible that they contemplated that any rule of law, that was not contradictory, might come in under the exception. So far as I can see, the legislature used the words 'or any other law for the time being in force' with this intention. There might be in force at the time of the passing of the Civil Procedure Code, 1908, any local law or law by the Indian legislature dealing with arbitration, for special oases. Or some law might be enacted in future laying down special rules for special cases of arbitration. It was intended that those special cases should not be governed by the rules laid down in second schedule. This idea is perfectly intelligible, e.g., a local legislature dealing with say the indebted agriculturists of Bundelkhand, may desire that) a certain kind of dispute among these people should be referred to the arbitration of the Collector of the district. With this view, if the local legislature should enact certain rules according to the language of Section 89 of the Civil Procedure Code, those rules would not clash with the provisions of Section 89, Civil Procedure Code. Whatever meaning may be given to the words any other law for the time being in force', lam absolutely clear in my mind that those words were never meant to apply to the schedules to be appended to the male 'Code of Civil Procedure. Any such idea would suggest a clash between the main rule embodied in the Code and a rule contained in the schedule. Any High Court may add be or alter the rules in the schedule, but they can do so only subject to the provisions of the main Code. I am therefore, definitely of opinion that an award which has been arrived at by a inference of the subject-matter of an appeal arbitration pending the appeal cannot be recognised as an 'adjustment by lawful agreement' by the parties to the appeal or as a 'compromise'. I need not repeat that if it were the case that both the parties accepted the award) there would be no difficulty in the acceptance of it by the Court. But then the award would be accepted not as an award but as a document embodying what has been accepted by the parties as a proper basis for the settlement of their dispute.
41. Now, coming to authorities, there are some cases decided prior to 1st January, 1909, when the new Code of Civil Procedure came into force and there are others which were decided after the new Code of Civil Procedure was brought into effect. The earlier cases are Sami Bai v. Premji Pragji (1896) 20 Bom. 304 and Prag Das v. Girdhar Das (1902) 26 Bom. 76. These cases are no sure guide to us who have to construe the present Code. For Chapter 37 of the old Code did not contain any such rule as has been enacted in Section 89 of the new Code, viz., that all proceedings of arbitration whether by an order in a suit or otherwise should be governed by the provisions of second schedule. Indeed the learned Chief Justice Jenkins, who was one of the Judges who decided the later case, expressly stated this to be a ground for not applying the rules on arbitration to be found in the old Code. He says : '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, therefore, think that the objection cannot succeed.' The case in 26 Bombay was decided in 1901 and of course the case in 20 Bombay is a much earlier one.
42. The case of Rukhan Bai v. Adamji Shaikh (1909) 33 Bom. 69 was decided in April, 1908, by Beaman, J. sitting alone. He held that where there was a reference to arbitrationc but it was as irregular submission, the award could not be accepted as an adjustment by lawful agreement. The judgment shows that Beaman, J. was not disinclined to follow the earlier cases of Sami Bai v. Premji Pragji (1896) 20 Bom. 304 and Prag Das v. Girdhar Das (1902) 26 Bom. 76, No other case under the old Code has been cited to us. I have already stated that any ruling given under the old Code cannot be a safe guide for us in construing Order 23, Rule 3 read with Section 89 of the present Code of Civil Procedure.
43. After the passing of the new Code, there are four Bombay cases. The earliest among these is the case of Harak Bai v. Jumma Bai (1913) 37 Bom. 639 decided by Davar, J, sitting alone. He had cited before him the case in 26 Bombay but he was asked not to follow that case in view of the new enactment contained in Section 89 of the Civil Procedure Code. Davar, J. confesses that according to the second schedule of the Civil Procedure Code, no reference to arbitration was contemplated in a matter pending before a Court, without reference to it. His judgment shows that he was inclined to hold that the validity or otherwise of the award must be enquired into-and the only point in question was whether the rules in second schedule should be followed or an enquiry should be made under the provisions of Order 23, Rule 3. For, he stated, that the opening words of Rule 3, Order 23, showed that in case of dispute there must be an enquiry. Then the learned Judge found what he thought was a way out of the difficulty and ha proposed to treat (vide page 643 of the report) the words any other law for the time being in force in Section 89 as applicable to Order 23, Rule 3 of the Civil Procedure Code. I have already given my reasons for this interpretation being erroneous. I shall content myself with pointing out that the learned Judge gives no reason whatsoever for his ruling, that the words any other law for the time being in force had reference to the provisions of Rule 3, Order 23 as well, other than this that he found it expedient to do so. In my opinion the case in 37 Bombay, page 639 is entirely inconclusive and carries no weight. The next case cited to us is that of Venkatesh v. Ram Chandra (1914) 38 Bom. 687. In this case no award had yet been delivered and the only matter that was before the learned Judges was the reference the learned Judges held that the agreement to refer to arbitration could not be treated as an adjustment. Although there are remarks in the body of the judgment, which may be cited as authority foe the contention of the appellant, I do not think that the case can be treated as an authority for the point raised before us. The judgment; of Hayward, J. is very instructive. Ha referred to 'the Privy Council case of Ghulam Khan v. Muhammad Husain (1902) 29 Cal. 167 and remarked that caution must be observed in giving weight to that distant authority, the case of Prag Das v. Girdar Das (1902) 26 Bom. 76, in view of the observation of the Privy Council. In the case of Shavek Shah v. Tyabji (1916) 40 Bom. 386 Macleod, J. held that it was not intended that a party might apply for a decree under Order 23, Rule 3, if the award had been obtained by a reference to arbitration in a matter about which a suit was pending, without reference to the Court itself. In that case, however, the parties agreed, evidently in view of the previous decisions of the Bombay High Court, that the application (for acceptance by the Court, of the award as an adjustment) might be treated as an application under paragraph 21 of Schedule 2 of the Civil Procedure Code. The application was thereupon ordered to be set down for hearing accordingly. The last case in the Bombay High Court is that of Mani Lal v. Gokul Das A.I.R. 1921 Bom. 310 and it entirely favours the respondent-applicant's contention. Macleod, C.J. went so far as to hold that either party could file a suit to enforce the award and apply for a stay of the original suit, where a reference to arbitration of the subject-matter of a suit was made without the intervention of the Court. Fawcett, J. thought, and he was right so far as the Bombay High Court was concerned, that there was a vary considerable weight of authority in favour of the view that an agreement to refer the matter in suit to arbitration and the award made thereon might amount to an adjustment of the suit by the lawful agreement within the meaning of Order 23, Rule 3 of the Civil Procedure Code (vide page 268 of the report). Than ha considered the question whether Section 89 of the Civil Procedure Code prevented the operation of Order 23, Rule 3. Ha admitted (page 273 of the report) that no doubt the words 'other law for the time being in force' were inappropriate for covering a provision of the Code itself such as Order 23, Order 3. But he thought that the legislature in enacting Section 89 probably had not that particular rule in their mind and had no intention of affecting it one way or the other. I have already attempted to show that Section 89 read with Schedule II provided a complete machinery for all kinds of arbitration and only required that proper methods should be followed, I have also attempted to she that Order 23, Rule 3 was meant to apply to entirely different matters and if an arbitration award was ever in contemplation the legislature would not have taken a very very round about and doubtful way of expressing their intention. I am clearly of opinion that no Judge has a right to over-ride the clear provisions made by the legislature on the plea that probably the legislature forgot something or had not something in their mind. I may mention that this case in 45 Bombay was a Letters Pattents Appeal against the judgment of Kajiji, J. and that learned Judge held an entirely contrary view.
44. Coming to the Madras High Court we have but one case and that was an exceptional one. It was the case of Chinna v. Venkataswamy (1919) 42 Mad. 625. In this case the parties agreed to abide by whatever was decided by the presiding Judge of the Court in association with two private persons. The three gentlemen came to a certain decision and the decree of the Court was made in accordance therewith. The question arose whether the decree could be appealed against. The learned Judges held that the decree must be taken to have been a consent decree and that no appeal lay. Further comment is needless. This case does not throw any light on the point in controversy before us.
45. Coming to the Calcutta High Court, there are only two cases. In the case of Amar Chand v. Banwari Lal A.I.R. 1922 Cal. 404 Rankin, J. held that where in a pending suit parties went to private arbitration without the consent of the Court, the award oould not be enforced either under Order 23, Rule 3 or under the provisions of the Indian Arbitration Act. The learned Judge bases his opinion on the remarks of their Lordships of the Privy Council in the case of Ghulam Khan v. Muhammad Husain (1902) 29 Cal. 167. He points out that their Lordships of the Privy Council pointed out the scheme of the rules as to arbitration as contained in the old Code and held in effect that the rules covered all cases. Compare the remarks of Hayward, J., in Venkatesh v. Ram Chandra (1914) 88 Bom. 687. Their Lordships of the Privy Council pointed out at page 182 of the report that, where the parties to a litigation desire to refer to arbitration any matter in difference between them in the suit, all proceedings from first to last are under the supervision of the Court. Evidently the Section 89 of the Civil Procedure Code was enacted on the basis of this Privy Council case, and it provided that all references to arbitration, to be of binding effect, must be made according to Schedule II of the Civil Procedure Code.
46. In the second case, Rankin, J. was associated with Sir Ashutosh Mukerji, J. and the two Judges in the case of Rampratap Chamaria v. Durga Prasad Chamaria : AIR1924Cal567 , affirmed the opinion of Bankin, J. as expressed in the case in Amar Chand v. Banwari Lal A.I.R. 1922 Call. 404 and in the still earlier case in Dekari Tea Co. Ltd. v. Assam Bengal Rly. Co. A.I.R. 1921 Cal. 238.
47. The review of authorities shows that there is a complete divergence of opinion between the Calcutta and Bombay High Courts and that the opinion of the Madras High Court is inconclusive. The review further shows that the learned Judges of the Bombay High Court found it difficult to get over the provisions of Section 89 of the Civil Procedure Code and Kajiji, J. thought that it was conclusive that an award arrived at, on a reference out of Court, could not be treated as an adjustment under Order 23, Rule 3. The learned Judge Davar found it expedient to read Section 89 as if excluding Order 23, Rule 3 out of its provisions. Fawcett, J. found that this, was not possible to do, but ha thought that the legislature had forgotten what provisions they were going to make in the schedules when they enacted Section 89 in the1 body of the Code. The authority of the Bombay High Court is therefore, of doubtful strength.
48. I have already given my own reasons for my conclusion, viz., (1) an award is not an adjustment by an agreement of parties within the meaning of Rule 3, Order 23, and (2) even if any contrary opinion could be entertained before the passing of Act V of 1908, Section 89 of the Act makes it impossible to maintain such an opinion. I may point out that in this case the parties themselves contemplated that the appeal in which the present application has been made, and the application for leave to appeal to the Privy Council against the decree awarding possession to the present respondent, should be withdrawn before the arbitrator entered upon the arbitration.
49. On fact and law, therefore, I would hole that the respondent's application is without any force and I would dismiss it with, costs.
50. In accordance with the view of the majority the appeal is dismissed with costs.