1. This appeal arises out of an application under paragraph 20 of the 2nd Schedule of the Civil Procedure Code, which has been rejected by the Court below.
2. The parties to the application are all members of a Hindu family and are Brahmans by caste. They reside at Benares and are wealthy, carrying on a large business in the purchase and sale of precious stones and jewelry.
3. The applicants are all the male members of the joint family except one. The exception is the sole defendant Joshi Ram Nath, against whom the application was made.
4. The case for the applicants was that Joshi Ram Nath came of age in 1914 and took to riotous living and incurred heavy debts. This led to disputes, on which all the members including Ram Nath agreed to partition the family property and to separate. That accordingly an agreement was drawn up, and duly executed on 5th July 1914 and presented for registration on 18th July 1914.
5. That under the agreement one Panna Lal was appointed arbitrator to divide up the estate and was given a period of four months within which to carry out the partition. That because the books of the business were not available, having been filed in a civil suit then pending against the Raja of Amethi, the parties agreed to give the arbitrator further time and on October 21st, 1914, filed a joint application before him asking him to fix a date for decision after the expiry of two months from that date.
6. That the arbitrator commenced his proceedings in the end of December 1914 after the receipt of the books and finally passed an award on 25th January 1915. That the, award was a good one and binding on the parties, and should be filed and a decree passed in accordance therewith, Ram Nath Joshi, defendant, in reply to the application pleaded.
(1) that he did agree to the partition of the estate through arbitrators but at no time agreed to Panna Lal being the arbitrator, that the, plaintiff No. 1 Joshi Damodarji had named certain other persons to whom he (defendant) had agreed but fraudulently and without the defendant's knowledge had the name of Panna Lal entered in the agreement and in ignorance thereof the defendant executed the same;
(2) that when he discovered the fraud, he gave several notices to Panna Lal to the effect that he (defendant) did not agree to the arbitration and that Panna Lal was not to proceed with it;
(3) that if he did execute the agreement, he had good and valid reasons for withdrawing from it (1) because the arbitrator was a friend and under the influence of Joshi Damodarji with whom he had money dealings, and (2) because he was an insolvent;
(4). that the award was not binding in that it had not been passed within the time limited by the parties, and that he (defendant) had not agreed to any extension of time;
(5) that the arbitration proceedings were all ex parte as against the defendant, that no, notice thereof was given to him nor was he informed that if he did not appear, the arbitrator would proceed ex parte as against him, that the arbitrator took no evidence on his behalf and all his proceedings were in bad faith as, in fact, there was no hearing of the case at all by the arbitrator;
(6) that the arbitrator had left undecided several points in dispute and had decided several points not referred to him by the parties;
(7) that the award had not been duly, delivered by the arbitrator;
(8) that one of the parties to the submission, viz., Gauri Shankar died after the submission and before the award and the proceedings were, therefore, null and void.
7. The Court below held on the eight issues framed by it as follows:
(1) That the defendant Ram Nath Joshi did, of his own free will and accord and without the exercise of any undue influence, execute the agreement to refer the matters in dispute to the arbitration of Panna Lal.
(2) That the defendant did withdraw from the arbitration and that he had good grounds for so withdrawing.
(3) That the award had not been duly delivered in the presence of the defendant.
(4) That the arbitrator did not hold the arbitration meetings in the presence of the defendant.
(5) That the arbitrator had failed to decide most of the matters referred to him for decision, that he had divided the property in a manner contrary to the agreement between the parties, that he had' acted upon his own knowledge and not on evidence and that for these reasons the award was not binding.
(6) That the death of Gauri Shankar did not adversely affect the arbitration proceedings as his representatives were lawfully made parties to the proceeding.
(7) That the award was not made within the time fixed by the agreement and not even within the extension granted by the parties under the application made by them on 21st October 1914 to the arbitrator.
(8) That the arbitrator proceeded ex parte against the defendant without giving him due notice of his intention to do so, that he ought to have done so and having failed was, therefore, guilty of gross misconduct.
(9) That the defendant was not duly-represented by any one at the time of arbitration.
8. On these findings it disallowed the application. In so far as the findings are against them, some of the applicants have appealed.
9. The appeal is contested only by the defendant Ram Nath.
10. It is pleaded:
(1) that the defendant entirely failed to show sufficient season for revoking the reference to arbitration;
(2) that the award was made within time;
(3) that the arbitrator has not been proved to have been guilty of any misconduct;
(4) that the arbitrator has neither failed to decide any of the matters referred nor decided any matter not referred to arbitration.
11. The learned Advocate on behalf of the respondent admits that he cannot support all the findings of the Court below, and that he can only support its decree on two main grounds:
(1) that the arbitrator was guilty of misconduct in that he held meetings and conducted proceedings in the arbitration on dates of which he gave no notice to the defendant and, therefore, behind his back;
(2) that the award was not delivered within time.
12. Towards the end of his argument he also urged that there was nothing to show that the arbitrator took into account the Bank of Bengal account and the amount deposited therein under paragraph 4 of the 5th July 1914.
13. He does not challenge the finding of the Court below that no fraud was practised on his client in regard to the agreement of the 5th July 1914. On this point we have no hesitation in saying that we fully agree with the Court below. The defendant's case was that though he had agreed to partition by means of arbitration, still he had never agreed to accept Panna Lal as an arbitrator, that Panna Lal was a friend of his cousin, the appellant Joshi Damodarji, had had money dealings with him and had become an insolvent that a gross fraud was practised on him in that Panna Lal's name was entered in the document without his knowledge or consent, that the document was written in the Arabic character which he cannot read, that it was not read over to him, and when he discovered the fraud he at once protested and sent a notice to Panna Lal and repeated this notice on three subsequent dates. The Court below has found, and rightly so, that this story of fraud is entirely false. The facts are that this defendant came to the age of majority (18 years) in June 1914. He at once took to dissolute ways and within a few months ran into debt to the extent, as he himself admits, of Rs. 50,000 to Rs. 60,000. He is one of three sons in one of the three branches of the family. His brothers also incurred debt and the other members of the joint family saw ruin staring them in the face by a continuation of this state of affairs. Ram Nath, as his learned Advocate admits, had got into the hands of rascals who were pandering to his immoral tastes and fleecing him of his wealth. It was this that led to the idea of partition and the evidence leaves it beyond all doubt that he agreed to the division being carried out by Panna Lal as arbitrator. He executed the document and registered it. It was read out to him at the time of registration. He also executed on 6th July 1914 and registered a general power-of-attorney in favour of his elder step-brother Durga Shankar. On August 3rd, 1914, he and his brother Durga Shankar filed an application signed by both before the arbitrator (Exhibit 10), pointing out that their creditors were pressing them and asking for an advance from the common funds, to be debited against the shares to be ultimately allotted to them.
14. It was not until August 31st, 1914, that he attempted to withdraw, on that date with the assistance of a Pleader's clerk he sent a registered letter to the arbitrator. He and the clerk say that it contained an intimation that he declined to go on with the arbitration. Panna Lal says that it contained a blank sheet of paper and he wrote to Ram Nath to that effect, as the latter admits.
15. On 9th September 1914, the latter sent a second notice.
16. On October 21st, 1914, an application was filed by the parties before the arbitrator asking him 'not' to take up and decide the case 'within' the next two months owing to the absence of the account books. It bears Ram Nath's signature and he admits it, but again pleads another fraud by his cousin upon him in obtaining it. He has perjured himself so much as to the alleged initial fraud that we have no hesitation in accepting the evidence of Joshi Damodarji and holding that the second alleged, fraud was not committed upon him.
17. On 18th November 1914 he asked Panna Lal to obtain for him some money as one of his creditors was pressing him and, as Panna Lal's evidence and that of Damodarji shows, the arbitrator obtained for him a cheque for a fairly large sum. On December 23rd he sent another notice and a telegram to the arbitrator to the effect that he refused to accept the arbitration.
18. He repeated the notice on December 30th and on 2nd January 1915 he instituted a regular suit for partition of the estate.
19. The arbitrator after making his inquiry and dividing the estate pronounced his award on 25th January 1915 and the moveable property in the shape of jewels, etc., allotted to Ram Nath was deposited in the Bank of Bengal at Benares to his credit.
20. This application to file the award was made on January 26th.
21. Two facts are worthy of note:
(1) that the fairness of the actual division of the estate by the arbitrator has not been questioned;
(2) that all the members of the family except Ram Nath have accepted the arbitrator's decision.
22. The first question for our decision is whether the respondent had good cause to revoke the submission to arbitration.
23. The grounds stated by Ram Nath himself are:
(1) The alleged fraud practised upon him by his cousin and in regard to which his allegation has been found to be false.
(2) That Panna Lal was an insolvent.
(3) That he was under the influence of Joshi Damodarji and had money dealings with him.
24. On the two latter points Ram Nath was unable to produce any evidence whatsoever and his allegations are totally denied on oath. Though the Court below has decided the point in favour of Ram Nath it has not done so on any of the grounds put forward by the latter.
25. It has held that he had good cause:
(1) because the arbitrator held meetings without fixing dates and informing the parties:
(2) because the arbitrator commenced proceedings several months before he received the original agreement of the 5th July 1914;
(3) because in the Opinion of the Court below the arbitrator showed great partiality to Joshi Damodarji;
(4) because Panna Lal sent no replies to the notices sent to him by the defendant.
26. The first of these grounds is an irregularity which amounts to misconduct on the part of an arbitrator and would be good ground for setting aside an award, if it were true. We shall show later on that there is no real substance in this objection and that the arbitrator has not been guilty of any such misconduct.
27. In regard to the second ground nothing need be said, as it plainly is of no force.
28. In regard to the third, the Court below does not state in its judgment, in what manner the arbitrator showed any partiality to Joshi Damodarji and the learned Counsel for the respondent has not attempted to Show us anything on the record.
29. The fourth ground is also clearly of no force whatsoever. We are clearly of opinion that no substantial cause for withdrawing from the arbitration has been shown.
30. The next question is whether or not the award was made within time.
31. The decision on this point depends upon the true meaning of the application of 21st October 1914, which the parties filed before the arbitrator. This is the application in respect to which Ram Nath pleaded that his signature had been fraudulently obtained and in regard to which plea, we have already expressed oar opinion that it is untrue. It was filed after he had already twice notified the arbitrator, on 31st August and 9th September, that he withdrew from the arbitration.
32. The translation in the printed record is inaccurate. The petition pointed out that the partition could not be carried out without the account books of the firm and that they had not been yet returned by the Civil Court. The prayer is contained in the last sentence: Therefore it is prayed that a date be fixed for decision bad do mahine', i.e., that some date more than two months ahead of the date on which the prayer was made, should be fixed for decision of the case. It is clear that the parties calculated that it would take two months to obtain the books from the Civil Court and they left it to the arbitrator to fix some date ahead for the hearing and decision of the matter.
33. The original period of four months fixed by the agreement of 5th July 1914 would expire on 5th November 1914. This petition left it to the arbitrator's discretion to fix a date after 21st December. The books appear to have been secured sometime early in December and the arbitrator's evidence leaves it beyond doubt that he began work in earnest soon after December 21st. The lower Court has apparently interpreted this petition to mean that the matter was to be decided within two months of October 21st, i.e., on or before 21st December. The word bad' in no way can mean on' or 'before'. Its pure meaning is after' and we cannot understand how the Court below gave such an erroneous interpretation to this document. The arbitrator decided the case on January 25th, 1915, and we are of opinion that he decided it within a reasonable time after the 21st December 1914, and that the parties left the extension of time entirely to his discretion and that he exercised a wise and proper discretion.
34. The next question for decision is whether the arbitrator has been guilty of misconduct.
35. The Court below has held:
(1) That he held meetings without fixing dates and in the absence of the defendant.
(2). That he proceeded ex parte against the defendant without giving him notice that he intended to do so.
(3) That he did not deliver his judgment in the defendant's presence and that the award was, therefore, not duly promulgated.
36. These points are best discussed together. The defendant, as we have already pointed out, appointed his half brother Durga Shanker as his attorney. Durga Shanker attended the arbitrator's Court and from time to time signed the proceedings. Ramnath has sworn that he revoked the power of attorney and that he filed an application in the Collector's Court giving due notice of the revocation. He says that he informed Durga Shanker and his cousin Joshi Damodarji. The learned Subordinate Judge says that he can see no valid reason to disbelieve this evidence. In view of the defendant's character and the false allegations of fraud made by him, we find it impossible to accept his evidence standing as it does entirely uncorroborated. Neither the petition which is said to have been filed in the Collector's Court nor a copy of it has been filed. He admits that he gave no information on the point to the arbitrator. He does not state the date or month of the alleged revocation.
37. Nor indeed does it much matter whether or not he did revoke this power-of-attorney, for we have it from the mouth of the arbitrator himself that when he fixed dates for the hearing of the case, the taking of evidence and the division of the property, he duly gave the parties information so as to enable them to attend and if the defendant without just cause abstained from attending, he cannot be heard to plead that he was not duly represented at the hearing of the case.
38. The lower Court has held that the arbitrator, on finding that the defendant did not attend, ought to have given the latter notice of his intention to proceed ex parte, relying for this on a practice prevalent in England and mentioned at page 153 of Russel on Arbitration. But in so doing, the Court has lost sight of the fact that the defendant had without just cause attempted to revoke the submission to arbitration, Four times be had sent notices to the arbitrator to this effect. The arbitrator resolved to proceed with the case and gave the defendant due notice of the various dates fixed. The latter did not intend to attend and had denied the arbitrator's authority. There is nothing in the law of arbitration in this country which made it necessary for the arbitrator to give any further notice, for the defendant had full notice that the arbitration was proceeding in spite of his notices of withdrawals. It cannot be said that an arbitrator is guilty of misconduct if he adopt, for the purposes of the trial before him the procedure laid down by the Legislature for the ordinary Civil Courts. Where a defendant in a civil suit receives due notice from the Court of the suit and date fixed for its hearing and wilfully abstains from appearing, it is not incumbent on the Court to inform him of the fact that it intends to proceed ex parte.
39. Here the defendant had joined in the submission, without just cause he subsequently denied the arbitrator's authority and clearly indicated his intention of not appearing. In spite of this the arbitrator gave him due notice of the various dates fixed. We fail to see that the arbitrator was guilty of any misconduct. There remains the question whether the arbitrator has been guilty of misconduct in that he held some three or four 'meetings' (as the word 'jalsa' has been translated) without first fixing dates for the same and informing the parties.
40. It is clear that if an arbitrator takes evidence or hears arguments in the absence of one of the parties without having given due notice of the time and place fixed for the hearing, he would be guilty of misconduct which would vitiate his award, but in the case now before us it is manifest that he has done no such thing. The only evidence on the point is the statement of the arbitrator himself, and the plea is based on certain sentences to be found in the record of his evidence but those sentences must be read together with his explanation thereof. He stated: 'I did not fix any dates for the meetings I held for arbitration at first. They all assembled and meetings were held. There were three or four such meetings as were held without fixing dates.' In the first place, he distinctly says that all the parties were present at these informal meetings and in the next place he added: 'The arbitration proceeding that I took without fixing a date was that I consulted at my house as, to how I should proceed with anything and if anyone presented an application I took it. The consultation was held with the members of the family but not with each of them separately'.
41. It is quite clear that there were preliminary proceedings prior to the hearing of the case, which did not really commence until the end of December, that neither evidence was taken nor arguments heard nor the partition carried out. In regard to the other meetings the arbitrator testifies that he fixed dates and duly notified the parties in writing and also orally by messenger.
42. There is no evidence to contradict the arbitrator and we are of opinion that his word in this respect may be trusted.
43. In regard to the delivery of the award, the fact that the defendant was absent at the time does not in any way vitiate the award. It was communicated to him at once by the arbitrator, as he has admitted. There is no force whatever in this plea of misconduct, seeing that the defendant's absence was intentional.
44. The last point for decision is, whether the arbitrator has failed to decide any of the matters referred to him or has decided matters not referred to him. (Issue 5 in the suit.) The lower Court's judgment on this issue begins as follows:
Most of the matters referred to the arbitrator for decision have not been decided by him.
45. We can find no warrant for this statement. Certain points are taken in the judgment and they are as follows:
(1) The learned Judge says that:
Though the parties had a dispute about the self-acquired property, yet the arbitrator does not seem to have held any inquiry about it but he has recorded the statement of the sharers about it.
46. There is no allegation that the arbitrator refused to take any evidence offered on the point and the question of the self-acquired property is dealt with at length by him in the forefront of his award. There is no basis whatever for the lower Courts remark and there is a clear decision on the point.
(2) The Subordinate Judge says:
The second matter which the arbitrator has failed to do according to the agreement, is that he has allowed the outstanding debts due to the firm of the parties to remain joint, whereas under the second Clause of the agreement the arbitrator was authorised to divide the same in such a manner as to give distinct debts to each of the sharers in entirety.
47. This remark is grossly inaccurate and entirely unfair to the arbitrator. Clause 2 of the agreement is to the effect that the arbitrator should as far as possible', in dividing up the debts due to the family, allot the whole of a debt to one party and this the arbitrator has done so far as the good debts of the firm are concerned.
48. In regard to the bad debts the collection of which was doubtful, he directed that these should be recovered by Damodarji and after deduction of the costs of collection, should be divided among the parties in proportion to their respective shares.
(3) The lower Court remarks, no account of the deposit of the joint fund in the Bank of Bengal seems to have been shown to the arbitrator at the time of arbitration.'
49. This at most is not misconduct on the part of the arbitrator and as a matter of fact that fund was taken into consideration by the arbitrator in the partition.
(4) The lower Court takes exception to the fact that two pearls which had been sent to Europe for sale had not been valued by the arbitrator and were left as joint property by the arbitrator.
50. The fact is that the true value of these pearls was not ascertainable and so they could not be sold, being in the hands of European dealers. The arbitrator decided that directly it could be done, they were to be sold and the prize obtained was to be divided among the sharers in proportion to their share. Nothing was left joint. Specific sharers were allotted. Clause 2 of the agreement left something to the arbitrator's discretion.
(5) The fifth objection taken by the Court below is, not that the arbitrator had left the house property out of the partition, but that he had partitioned it in a manner not in accordance with that laid down in the agreement. They fell to the share of one party, the others receiving compensation. The Court below is of opinion that they should have been divided between the parties. There is no force at all in the objection, because the arbitrator acted under Clause (7) of the agreement. Each lot of property was put up to auction among the parties and the one who offered most obtained it, the other receiving their share in cash.
(6) Lastly the Court remarks that the arbitrator was guilty of misconduct in that he acted on his own knowledge with respect to the value of the houses.
51. In the first place, this remark has no concern with the issue and in the second place, is incorrect. The valuation of the house property was the price offered by the highest bidder at the auction among the parties.
52. We have noted these points as being the reasons given by the Court below, for its holding that most of the points for decision were left undecided. The learned Advocate for the respondent has not attempted to support the finding of the Court below on this issue on any of the above noted grounds. In a rather hesitating manner he has pointed to Clause 6 of the agreement and urged that the arbitrator made no arrangement for the costs of the food and private expenses of the parties between the date of the agreement and the date of the award, basing his argument on the statement of the arbitrator at page 20A (c to e). He urged that the arbitrator had failed to carry out his duty in respect thereto.
53. Under Clause 6 the parties agreed that they were to draw the funds necessary for such expenses during the arbitration from Joshi Damodarji and at the time of the partition the amounts thus drawn were to be deducted from their shares of the property and handed over by the arbitrator to Damodarji. The arbitrator explains that the parties produced no such accounts before him, as they probably made their own arrangements to meet their own expenses. He, therefore, divided up the whole of the property and awarded nothing on this ground to Damodarji. The latter would be the person aggrieved, if anybody, if money specifically due to him had not been allotted to him. He makes no complaint. In fact all the co-sharers have accepted the award except Ram Nath. In the absence of evidence on the point the arbitrator was quite correct in not allotting anything to Damodarji.
54. We, therefore, hold that no point has been left undecided by the arbitrator. No attempt has been made to show that he decided any matter not referred to him.
55. We, therefore, are of opinion that the award is a complete award, that the arbitrator has not been guilty of any misconduct, that his award is an honest one accepted by all members of the family excepting Ram Nath, that no fraud whatsoever was practised on the respondent by any one, that he voluntarily agreed to submit the matter to the arbitration of Panna Lal, that he had no just cause for attempting to withdraw from the arbitration and that the award is good and binding upon him.
56. We, therefore, allow this appeal, set aside the order of the Court below and direct that the award be filed in Court.
57. Under paragraph 21 of the Second Schedule of the Civil Procedure Code we pronounce judgment according to the award and decree the claim accordingly. A partition decree will be drawn up in accordance with the terms of the award on the necessary stamped paper according to law.
58. The above order includes the costs of the case in both the Courts to the appellants. Casts in this Court will include fees on the higher scale.