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indramoni Mohapatra Vs. Nilamoni Moharana - Court Judgment

LegalCrystal Citation
Decided On
Case NumberCivil Revn. No. 137 of 1949
Reported inAIR1950Ori169
ActsArbitration Act, 1940 - Sections 47; Code of Civil Procedure (CPC) , 1908 - Order 23, Rule 3; Contract Act, 1872 - Sections 23; Specific Relief Act, 1877 - Sections 21
Appellantindramoni Mohapatra
RespondentNilamoni Moharana
Appellant AdvocateD. Mohanty, Adv.
Respondent AdvocateA.S. Khan, Adv.
DispositionRevision allowed
Cases Referred and Suryanarayana Reddi v. Venkata Reddi
- motor vehicles act, 1988 [c.a. no. 59/1988]section 173(1) proviso; [d. biswas, amitava roy & i.a.ansari, jj] appeal without statutory deposit but within limitation/or extended period of limitation maintainability - held, if the provision of a statute speaks of entertainment of appeal, it denotes that the appeal cannot be admitted to consideration unless other requirements are complied with. the provision of sub-section (1) of section 173 permits filing of an appeal against an award within 90 days with a rider in the first proviso that such appeal filed cannot be entertained unless the statutory deposit is made. the period of limitation is applicable only to the filing of the appeal and not to the deposit to be made. it, therefore, appears that an appeal filed under section 173 cannot.....ray, c.j. 1. the petition ig directed against an order of remand passed by sri b. c. das, district judge of cuttaok-dbenkanal, in miscellaneous appeal no. 87 of 1948, reversing an order dated, 4th qetober 1948 of sri b. s. patnaik, additional subordinate judge of cuttack, in money suit no. 8/342 of 1948/47. the suit was for recovery of rs. 2193-12-0 being the sum borrowed with interest accrued thereon, under two handnotes executed by the opposite party in favour of the petitioner. the defendant resisted the suit, while accepting that the hand-notes were genuine and for consideration, with a plea of payment. the material date on which and since when the events giving rise to this application occurred is 3rd july 1948. on that date, the plaintiff was ready to go on with the hearing of the.....

Ray, C.J.

1. The petition ig directed against an order of remand passed by Sri B. C. Das, District Judge of Cuttaok-Dbenkanal, in Miscellaneous Appeal No. 87 of 1948, reversing an order dated, 4th qetober 1948 of Sri B. S. Patnaik, Additional Subordinate Judge of Cuttack, in Money Suit No. 8/342 of 1948/47. The suit was for recovery of Rs. 2193-12-0 being the sum borrowed with interest accrued thereon, under two handnotes executed by the opposite party in favour of the petitioner. The defendant resisted the suit, while accepting that the hand-notes were genuine and for consideration, with a plea of payment. The material date on which and since when the events giving rise to this application occurred is 3rd July 1948. On that date, the plaintiff was ready to go on with the hearing of the suit, and filed a list of witnesses. The defendant interposed a plea, as a barrier to the suit, by a petition purporting to be one undtr Order 23, Rule 3, Civil P. C. for recording as a compromise an award given in an arbitration oat of and without the intervention of the Court, on a reference made during the pendency of the suit. The plaintiff, took exception to the plea on 27th September 1948. On the date, next following, that is, on 29th September 1948, the learned Additional Subordinate Judge heard the parties and was of opinion that the plea of accord and satisfaction taken by the defendant on the basis of the award obtained pending suit on an arbitration without the intervention of the Court was not available to the defendant and set down the case for hearing on merits.

2. The defendant took up an appeal against the order. The District Judge reversed it with an order of remand for reconsideration of the defendant's application on merits, in the light of his observations set out therein. The substance of his observation was embodied in the following passage quoted from his order :

'The agreement executed by the parties white referring the matter to arbitration has therefore to be examined to ascertain if it was an agreement to accept a future award, which be treated as a compromise in the suit, but that agreement is not before the Court as the learned Subordinate Judge did not enter into any evidence, although the defendant-appellant, as the record shows, was ready with it. In the circumstances there is no alternative but to set aside the order of the learned Subordinate Judge and send back the application to him for fiesh disposal according to law in the light of the above observations after taking such evidence as the parties choose to place before him '

3. It may be noted that there is no indication in the order that the Court should hold any Buoh enquiry as would be pertinent to a decision if the award, as such, is otherwise valid and binding between the parties. Such considerations, as a Court has to address itself to, in order that an award can be enforced, as a judgment of Court, for example, misconduct of the arbitrators, if any, excess of jurisdiction on their part, error apparent on the face of the award and the like have not been specified by the learned District Judge as within the scope of the rehearing.

4. The learned Judge, for holding that the award shall be treated as a conclusive adjust ment of the suit to found a decree thereon, relied solely upon a decision of the Madras High Court reported in Arumuga Mudaliar v. Balasubramania Mudaliar, A.i.r. (32) 1945 Mad, 294: (I.L.R. (1946) Mad. 39). The statutory provision dealing with the subject is contained in the proviso to Section 47, Arbitration Act (Act X (10) of 1940). The provieo it has been held in the aforesaid decision, by his Lordship, Leach C. J. has not altered, rather reaffirmed the (sic) relating to an award , when obtained on a reference to arbitration of the subject-matter of an action during its pendency without an order of Court, being treated as an adjustment of the suit even without the consent of all parties concerned being expressly and Specifically given in that behalf. In order to appreciate the meaning and in tend ment of the proviso, the context in which it has been set, the basic value of an arbitration agreement and binding character of an award obtained therein and the history of the legislation on the subject have to be kept in view. History of Statute law of Arbitration in India has followed the footsteps of that in England and has been moulded on the model of the same basic structure. It will show bow from a revocable agreement it has gradually developed into an enforceable contract witbin certain specified limits.

5. In the pre-British period the law of arbitration was not unknown in India but it bears no analogy to the form in which it applies now. We had in India territorial arbitration boards such as 'Village Fanchayats' and sectarian tribunals like Fanchayats of different castes and creeds. In the lower strata of the society tribunals like caste Panohayate are still to be found. The binding authority of the decisions of these Fancbayats is very great and their jurisdication is not confined to questions referred to them for decision but would cover cages of violation of unwirtten, social, caste or quasi legal rules of conduct. The aggrieved party could always summon a Panchayat and place his case before it. Such Panohayat tribunals Consider it as one of their normal functions to decide and dispose of such disputes. The sanction behind the decisions of the territorial Pancbayata or caste or sectional Faacbayats is ostracism from society and common privileges. With the commencement of the British Ad ministration, there was some statutory recognition however inchoate of arbitration as a mode of settlement of disputes cognizable in Courts of law. It did not extend however to disputed affecting immovable properties till 1813. The first regulation wbich laid down rules for referring suits to arbitration with the consent of the parties appeared in the Civil Procedure Cods in in the year 1787. Tb'ere was now detailed provision to regulate the arbitration proceedings. Regulation XVI [16] of 1793 made a sufficient inroad into the law of arbitration as understood in England, it being provided thafc disputes of certain description, such as disputed accounts, partnerships debts, doubtful or contested, bargains nan-performance of contracts would be only disputes that could be referred to arbitration. There were provisions prescribing the procedure in cases of such references, the awards and empowering the Gourts to set them aside. In 1813 provision was made extending the provisions of regulation XVI [16] of 1793 to suits with respect to rights in land. There were some regulations in Bengal such as regulation VII [7] of 1822 and IX [9] of 1883 which empowered Revenue and Settlement Officers to refer disputes as to rent and revenue to arbitrators and to exercise control over them in relation to their proceedings. In the Code of Civil Procedure, 1869 (Act VII [8] of 1859) provisions were made permitting references to arbitrations in pending suits and autbo. rising arbitration without the intervention of the Court. These provisions continued till the Code of Civil Procedure of 1882 (Act XIV [14] of 1832) replaced them by its Sections 506 to 536 dealing with references to arbitration with or without the intervention of the Court. In none of the statutes or regulations referred to above, there was any provisions for reference to arbitration of future disputes. All of them confine their pro. visions to references to arbitration of disputes after they had arisen. This was considered to be a great draw-back particularly in the law regulating commercial transaction Section 21, Specific Relief Act 1 [1] of 1877 first provided that save as provided by the Code of Civil Procedure, no contract to refer to arbitration shall be specifically enforced; but if any person who has made such a contract, and baa refused to perform it, sues in respect of any subjaot which he baa contracted to refer the existence of such contrast shall bar the suit. On account of the unenforcibility of a contract to refer to arbitration notwithstanding a half-hearted relief granted by the bar of a suit provided for in Section 21, this branch of law was in an unsatisfactory state. To remove this anomaly, Act IX [9] of 1899 was enacted on the lines of the English Arbitration Act of 1889. It made provision foe reference of disputes present as well as future to arbitration without the intervention of the Ooart. Though this Act was in force throughout India, its actual application as has been stated below was limited to Presidency towns besides a few more commercial towns The law of Civil Procedure as devised in 1908 effected an improvement above what it was in the Code of 1882 except that it was placed in the form of a Schedule with the hope that at no distant date they may be transferred into a comprehensive Arbitration Act. The Civil Justice Committee presided over by the Hon'ble Rankin J. in recommending to the legislature that it was high time that a separate arbitration Act should be enacted made a reference to the passage in wbioh the Richard's Committee that revised the Code of Civil Procedure expressed the hope of separate legislation of the law of arbitration. It is with this history that the present arbitration Act has been put on the statute book. It is a consolidating and amending law, all other laws on the subject having been repealed. This Act except in respect of a few points brings the law of arbitration in India, (rather, places the law of arbitration) at par with that in England. Before. I close the history, I should draw attention to the fact that the last 37 words of Section 21, Specific Relief Act, which effectuated a contract to refer into a bar to a subsequently instituted suit in respect of the game subject were repealed by the Arbitration Act, IX [9] of 1899 and It. 23 of Schedule 2, Civil P. C. 1908. The effect of this repeal was that in so far as these acts provided for direct or indirect mode of enforcement of an agreement to refer to arbitration or an award obtained therein, the contract so far as it covered the same subject of dispute could not operate as a bar to a suit relating thereto. The result, that emerged out of this, was that an arbitration agreement would be a bad plea in a suit unless the remedy available under the statutory law of arbitration was taken recourse to. It follows as a corollary that a contract to refer to atbitration became unenforceable and therefore, revocable at the will of a party except as provided in either the Civil Procedure Code or Act IX [9] of 1899. With the enactment of the Indian Arbitration Act, 1940, Section 21 so for as is material to arbitration contracts baa been fully recast and in its present form it reads :

'And, save as provided by the Arbitration Act, 1940, no contract to refer present or future differences to arbitration shall be specifically enforced; but if any person who has made such a contract other than an arbitration agreement to which the provisions of the said Act apply and has refused to perform it, sues in respect of any subject, which he has contrasted to refer the existence of such contract shall bar the suit.'

The effect of this amendment of the section on the revocability or otherwise of a contract to refer and the availability of an arbitration agreement as a pled to a suit shall be dealt with presently. A conspectus of the law of arbitration in England in the background of its historical retrospect will, I hope, be of great use in dispelling the doubts and difficulties that occasionally arise in application of the law of arbitration in India which owea its origin (and shall be) to that in England. Arbitration was not unknown to the common law (English). It was however, in a rather unsatisfactory state. Greatest good faith between the parties was requisite to its success. The agreement to refer was revokable and there was no known procedure for enforcing an award like a judgment. Wronged party would begin with right of action, say, trespass, and end in a right of action say in covenant upon the award. He would thus be little nearer to his goal at the end than at the beginning if his opponent did not deaire to perform what the arbitrator has awarded. Until an award was actually made, agreement to refer was regarded as a revokable authority given to a third person, namely, the arbitrator, in the nature of an authority given to an agent, The effect of this was that notwithstanding an arbitration agreement an action might be brought in the Courts in defiance of that agreement particularly so as 'an express exclusion of the jurisdiction of the Courts was void as contrary to public policy' Doleman v. Ossett Corporation: (1912-3 K. B. 257-61 L J. k. b. 1092). Besides, a party who feared that the decision might be against him might revoke the arbitrator's authority and the whole proceeding would be abortive. Other difficulties arose where an appointed arbitrator died or refused to act or where a party to an arbitration agreement refused to complete the submission by the appointment of an arbitrator. As against these disadvantages, the first pallia. tive that legal ingenuity discovered was to make the submission a rule of Court, the effect of which was to make revocation of the consent given to a reference or to ignore the decision of the arbitrator as constituting contempt of Court and the person in contempt becoming liable to attachment. The first great revision of the Law of Arbitration was contained in the Common Law Procedure Act, 1854, which provided that all written submission might be made rules of Court and the right of attachment was thereby applied unless the contrary intention appeared therein. The effect of the statute read with the provisions of the earlier statute on the subject was that if made a rule of Court such submissions were, except by leave, irrevocable; besides Ihia statute also provided that a party to a submission could ask for a stay of proceedings of a suit brought by his opponent in breach of agreement to refer. Accordingly, the Court was given the jurisdiction either to refuse or grant a stay of proceedings on such an application within his discretion. This power remains uptll now both in India as well as in England as one of the fundamental features of the present law of arbitration. This Act also, conferred powers on the Court on application of the parties or otherwise to remit an award to the consideration of the arbitrator, to appoint an arbitrator or umpire, to substitute a new arbitrator for one whose appointment has been proved abortive. Lastly, the entire law of arbitration was codified by several statutes beginning with Arbitration Act, 1889, and ending with the Act of 1934, All the Asia together form a Code, references by order of the High Court and Court of Appeal now being governed by the Supreme Court of Judicature Consolidation Act, 1925. From the commencement of the Act in 1935 the Acts dealing with the law of arbitration are to be cited together as the Arbitration Acts, 1839-1934. According to these Acts, by making submission a rule of Court or by seeking to enforce the award like a judgment and by adopting various other methods provided for in the Acts an agreement of reference to arbitration has become irrevocable.

6. The proviso cannot be dissociated from the history as well as from Sections 16 and 47 of the Act. The sections read:

'The provisions of this Act, except Sub-section (1) of Section 6 and Sections 7, 12 and 37, shall apply to every arbitration under any other enactment for the time being in force, as if the arbitration were pursuant to an arbitration agreement and as if that other enactment were an arbitration agreement, except in so for as this Act is inconsistent with that other enactment or with any rales made thereunder.'

'Subject to the provisions of Section 46, and save in so far as is otherwise provided by any law for the time being in force, the provisions of this Act shall apply to all arbitrations and to all proceedings thereunder;

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

7. They are enacted to replace a somewhat cor responding provision contained in Section 89, Civil P. C. and remove certain doubts that the construction of the latter section gave rise to. The said Section 89 and the Schedule II of Civil P. C. used till repealed by Section 49(1) read with Schedule III, Arbitration Act, 1940 (hereinafter referred to as 'The Act'), to govern all references to arbitration whether by an order of a Court or otherwise and all proceedings thereunder, save in so far as was otherwise provided, by the Indian Arbitration Act 1899 or by any other law for the time being in force. According to Section a, Arbitration Act, 1899, (since repealed) (which in its application was confined to agreements without order of Court) two conditions were required to be fulfilled before its provisions Could be attracted, viz, (i) that there should not be a suit pending in respect thereof, and (ii) that the case must be one in respect of which, if either party wanted to bring a suit, the suit could be instituted in a Presidency Town. Schedule II, Civil P. C. since repealed dealt with three kinds of references. The Schedule was divided into three parts, each part embracing a fascicule of rules under a distinct head. The three heads are (i) arbitration in suits (Rules 1 to 16 inclusive), (ii) order of reference on agreement to refer (Rules 17 to 19 inclusive) and (iii) arbitration without the intervention of a Court (Rules 20 and 21). The Indian Arbitration Act, 1899 and the Civil P. C., as between themselves governed the entire field of arbitration proceedings in British India. Besides, there was a large number of statutes which provided for arbitration in specified matters of dispute. Such statutory arbitrations, too, whether based on agreement of parties or not, were to be governed, except so for as the special statutory provisions indicated or prescribed otherwise, by the Act of 1899 or the Civil P. C. according as the disputes could be litigated upon in Presidency towns or outside. This will appear from Section 89, Civil P. C. In the Act there is an express provision in Section 46 extending its operation to every arbitration under any other enactment for the time being in force as if that other enactment were an arbitration agreement. The Act forms a complete Code of the law of arbitrations and awards being a consolidating and amending Act.

8. It will appear that in the Act the same classification of reference has been maintained with a slight change in the phraseology to be noticed presently. Chapter IV deals with the features special to 'arbitration in suits' except that the general provisions in chap. V also apply to such arbitrations in so far as their applicability is called for by the particular circumstances arising. 'Arbitration without intervention of a Court' is dealt with in Chap. II. Chapter III deals with 'arbitration with intervention of a Court where there is no suit ponding'. This corresponds mainly to the second head of Schedule II of the Code, 'an order of reference on agreement to refer;' It may be noted that Rule 18 of Schedule II, which provided for stay of suits filed during the pendency of a reference to arbitration has been replaced by Section 34 of the Act which finds place in Ch. v. under the head 'general'. The reason for it is quite obvious. Neither Rule 18 nor Section 34 makes any provision that the Court should, upon a motion for stay make an order of reference to arbitration. The Court's interference, in such cases, seems to be rather indirect, It serves the purpose by compelling the parties to perform their agreement as the sole means of settling their differences. The Court could however refuse to stay the suit for good reasons thus allowing a party to revoke the agreement and to abandon the domestic tribunal of his own choice. In the English Arbitration Act of 1889 there is a provision to the effect that no agreement to refer is revocable except by leave of Court. The same result is achieved if the Court refuses to stay the suit and thus relieves the plaintiff of the liability under the agreement. This amounts to revocation by leave of Court. The arbitration in the instant case is neither 'an arbitration in a suit 'nor' an arbitration with the intervention of the Court where there is no suit pending.' Like the one it is not a reference by order of Court nor like the other the agreement is made a rule of Court. The question then arises whether it will fall into the category of an arbitration without intervention of a Court within the meaning of the Act' At the first instance, it may appear to be so, as it is an arbitration which has proceeded through i-ta normal course without any Court's interference until an award has been given; and. the Chapter 'head' contains no words of limitation so as to confine it to cases where there is no suit pending. But for reasons to be stated presently, what appears on the surface is not real. Let us first examine what it meant in the Civil Procedure Code.

9. On reading Rule 20, Schedule 2, Civil P. C. it would be quite plain that 'arbitration without the intervention of a Court' was not contemplated in the Code to cover such an arbitration during the pendency of a suit The rule provides:

'Where any matter has been referred to arbitration without the intervention of a Court and an award has been made thereon, any perion interested in the award may apply to any Court having jurisdiction over the subject-matter of the award that the award be filed in Court.'

Sub-rule (2) provides:

'The application shall be in writing and shall be numbered and 'registered at a suit between the applicant as plaintiff and the other party as defendant.'

Such a rule would be quite inapt and inappropriate to a case where the parties to the arbitration have already been arraigned as plaintiffs and defendants in a pending suit already numbered and registered. According to Rule 21, if satisfied after due enquiries the Court may order the award to be filed and shall then proceed to pronounce a judgment according to its terms and upon a judgment so pronounced a decree shall follow. This provision too is inappropriate to an arbitration pending a suit without intervention of the Court. If it was so intended, the rule should have provided that the suit, thereupon (the award being obtained) be disposed of in terms of the award by adopting the same as the Court's judgment. There is no reference to what, if any, would happen to the pending suit. The Legislature having adopted the same phraseology as in the Code for the purpose of the Act, must be taken to have intended to describe the same kind of arbitration by the identical phraseology. Besides, internal evidence afforded by the various sections of the Act dealing with powers of the Court with reference to the said type of arbitration agreement and awards militates again at the idea that the self, same sections would apply to arbitration agreements in relation to subject-matter of a suit. Here too, Court is empowered to pass a judgment upon award on which to found a decree or to supersede the reference and to order that the arbitration agreement shall cease to have effect with respect to the differences referred; unlike as in Section 25 of Chap. IV dealing with arbitrations in suits there is no corresponding provision that the Court then 'shall proceed with the suit'. On the premises aforesaid the conclusion, that to my mind seems inevitable, is that a reference to arbitration of the subject-matter of a pending action without an order of Court is not included within 'Arbitration without the intervention of the Court' under the Act. In short, the sections dealing with the power of the Court to modify or remit or set aside an award in an arbitration without the intervention of the Court do not apply to 'the award' under consideration, nor do the sections which will enable the Court to appoint or remove arbitrators or revoke their authorities. The arbitrators or umpires in such arbitrations cannot, likewise, as they would otherwise do under Section 13 of the Act, exercise power to administer oath to the parties or witnesses, correct, in an award, any cleriaal mistake or error arising from any accidental slip or omission or to administer to any party of the arbitration suob interrogatories as may in the opinion of the arbitrators or umpires be necessary the powers that are inescapably necessary and legitimate for ex. eroise of their judical functions.

10. The questions that then fall to be considered are: Firstly whether such an agreement as the one in issue, is revocable at the will of a party and, if revoked, what is the consequence that should automatically follow. It is revocable if it is not specifically enforceable. Secondly, how far it supersedes the pending suit. According to an exception to Section 21, Specific Relief Act, it is not enforceable. The Exception reads:

'And save as provided by the Arbitration Act 1940, no contract to refer present or future differences to arbitration shall be specifically enforced; bat if any person who has made suob a contract other than arbitration agreement to which the provisions of the said Act apply and baa refused to perform it, sues in respect of any subject which he has contracted to refer the existence of such contract shall bar the suit'.

The latter part of the exception is not capable of application to a case of arbitration agreement during the pendency of a suit. The bar applies to a subsequently instituted suit not to one pre-existing. To hold that this bar applies in the present case would amount to saying that an arbitration agreement without intervention of a Court relating to the subject-matter of a pending suit supersedes it resulting in an automatic lapse of the Court's jurisdiction of the cause. Such a consequence is hardly conceivable except in so far as its abeyance or suspension temporarily can be achieved indirectly through the provisions of the Act, say, by exercise of the Court's power to stay legal proceedings pending disposal of refer, ence. This latter remedy, however, is not available to a post suit-agreement as the plaintiff was then under no obligation limiting his right to sue in a tribunal of law (vide Section 34 of the Act). Besides, the bar referred to above does not apply to a case where an agreement of reference has been acted upon and terminated in an award as a suit for cancellation is not againet the tenor of Section 21, Specific Relief Act, and that section has no application except wbere a person having made a contract to refer a controversy to arbitration has refused to perform it and institutes a suit in respect of the subject-matter in defiance of the contrast: Dwarka v. Bam Jatan, 53 ALL. 16 : (A. I. R. (17) 1930 ALL. 877).

11. Besides, it is apparent from the language of the Section (21, Specific Relief Act) that the bar contemplated is not available in the case of an arbitration to which provisions of the Act apply. As the proviso to Section 47 of the Act deals with awards obtained otherwise than under (the preceding provisions of) the Act, it can hardly be contended that the arbitration is one to which the Act does not at all apply. Saroar in his Tagore Law Lectures on the law of Arbitration in British India p. 86 thus summarises his comment on Section 21 of Specific Relief Act of 1877:

'Put concisely, the Specific Relief Act of 1877 was a bar to a salt for specific performance of an arbitration agreement, but it still permitted the defendant to plead the existence of suob an agreement as a bar to the suit. The result of deletion of the last thirty-seven words from Section 21, Specific Relief Act, was that the defendant could not plead the existence of the arbitration agreement as a bar to the suit. The result achieved was that there could neither be specific performance not would the arbitration agreement ba a bar to the suit. The defendant's sole remedy lay in moving ior the stay of the suit. On the suit being stayed, the defendant could take appropriate proceedings under the provision of the Indian Arbitration Act of 1899. If the suit is not stayed, the Court alone could adjudicate, arbitrators having become funotus officio. This is Also the position today.'

12. The position dedncible can be comprehensively formulated as below;

1. No contract to refer present or future differences to arbitration save as provided by the Arbitration Act, 1940, is specifically enforceable.

2. All arbitrations both statutory and contractual, except if otherwise provided for in any other law for the time being in force, are to be governed by the Act (vide Sections 46 and 47).

3. Chapters 2, 3 and 4 supplemented by other provisions of the let read as a whole contemplate enquiry into and enforcement of only three kinds of references to arbitration and the awards therein obtained, viz., (i) arbitration in suits, (ii) arbitration in agreements made into a rale of Court and (iii) awards in arbitration without Court's intervention.

4. Neither submission to arbitration of the subject-matter of a pending suit without Court's order nor the award obtained thereby is one of the three enumerated above, as I have already abown.

5. The award in such an arbitration forms into a category by itself and is within the contemptation of the proviso to Section 47 of the Act. (Parties to such a submission may at any time choose to abandon the suit by lawfully available means such as withdrawal or non-appearance or otherwise and then file the award for the purprse of its enforcement. The Court shall then have the duty to enquire into its validity and may in doing so exercise the power of modifying, remitting, setting aside or enforcing as the case may be under various section of the Act, for example, Sections 15, 16, 17, 19, 20 etc. or even superseding the arbitration altogether leaving the parties to remedies by suit).

13. Under the Act, when called upon to enforce it, the Court has to determine judicially the binding character of an award on being satisfied that it stands the test of a valid award based upon a valid agreement for arbitration. Excess of jurisdiction, corruption, misconduct of the arbitrators and their proceedings form relevant matters for consideration.

14. The defendant's contention, however, in the present case is that supported by the anticipatory consent given at the time of submission the pleaded award concludes the suit effectuating as it does a final adjustment and compromise of the subject matter and must a decree in terms thereof follow. In other worda, the un-willing plaintiff shall not be heard to countermand his consent--there being open no other point for its consideration 'as an award'.

15. To explain the contention, in its true bearing, I shall quote from the decision of the learned C. J. of the Madras High Court at p. 293 (A I R. (32) 1946 Mad. 294):

'Order 23 Bale 3 says .... There is here clear indication that agreement to aooept a future award can be treated as a compromise in the suit and, in our judgment, the Arbitration Act of 1940, in no way alters It.'

This view, if I may say so with great respect, suffers from a lacuna that it does not leave any scope for requisite inquiry that may result in either remitting or modifying or setting aside the award in the ultimate end or supersession of the agreement for arbitration. Like any other compromise it may only be subjected, to the scrutiny in relation to its being a lawful compromise within the purview of Order 93, Rule 3. The scope of this scrutiny is however limited. The law in this respect is thus summarised by Sir D.F. Mulla in his Commentary on Civil P.C. at p. 822 of 9th Edition :

'Where both parties to a suit apply to the Court under this rule to pass a decree in accordance with the compromise arrived at between them, the Court has no power to refuse to pass the decree, on the ground that it considers the compromise as too favourable to one of the parties. An agreement may be lawful although it is voidable for fraud or undue influence. The rule does not refer to such agreements but if the agreement or compromise IB unlawful, as where it is opposed to public policy, the Court should refuse to pass a decree in accordance with the compromise even if the parties consent.'

To accede to the contention of the opposite parties would result in depriving the non-consenting party of the remedies available under the Act or any other rule or law to avoid an invalid award vitiated by excess of jurisdiction, errors apparent on the face of it, corruption or misconduct of the arbitrators or the preceding fraud or deception vitiating the agreement to refer and the like. This is as if the agreement to refer to arbitration of the subject-matter of a suit without intervention of the Court amounts to waiver by the parties of their right to take any exception to the award however vitiated it may be and an acquiescence that unless opposed to public policy, it will by all means conclude the suit as a final adjustment of the subject matter. Looked from another aspect, it amounte to ouster of Court's jurisdiction.

16. On such an assumption, the questions that would confront us would be (i) whether such an agreement is good in law and as such irrevocable and inviolable (ii) what is the status of the award obtained in the arbitration. The proviso to Section 47, which is the theme of our consideration is new and had no equivalent in the Schedule 2, Civil P. C. which occupied the field of all arbitration with exceptions already noted in the earlier part of this judgment. An award of the kind, we have before us, became the subject of long continued controversy in Courts of law giving rise to conflict of views in the various High Courts in India. Accordingly, resting upon Arumuga, v. Balambramama, A. I. R. (32) 1945 Mad. 294: (I. L. R. (1946) Mad. 39), decision already referred to for the view that the newly enacted provision in the proviso (of Section 47 of the Act) has not altered the law, the counsel for respective parties have made their citations of authorities according as they support one view or the other. Instead of dealing with those decisions one by one I should consider it more useful to refer to Mulla's comments in his Commentary on the Code (9th Edn.) at pp. 820-821 under head Submission and Award. As would appear plain from the comments, the majority view is based upon supposed force of the arbitral agreement under the general law of contract that rules the validity and binding character of a compromise in. a suit enforceable under Order 23, Rule 3 and that it is saved from the operation of the special law of Arbitration by the words, 'Save as provided by any other law for the time being in force' in Section 89, Civil P. C., the exception that has been re-enacted in Section 47 of the Act by the words 'save in so far as is otherwise provided by any law for the time being force'. With very great deference to the agrument of the learned Judges to the contrary, 1 venture to say that the fallacy behind it is (i) that under the general law of contract an agreement to refer to arbitration present or future differences irrespective of the same being subject matter of a suit or not is not specifically enforceable and is therefore revocable, (ii) that compromise enforceable under Order 33, Rule 3, Civil P. C., derives its strength not from its basis on any reference to arbitration nor how else the parties arrived at the terms of the Compromise but their agreement to abide by the terms themselves. The latter is an agreement bestowing consent on the terms after they are fixed and settled but not an agreement to give consent to a further settlement if and when made or in other words an anticipatory consent.

17. As I have already hinted a reference of a suit to arbitration without an order of Court involves ouster or, at any rate, suspension for the time being, of the Court's jurisdiction to proceed with the trial of the suit. Looked at from this perspective, it is opposed to public policy and as a contract it is unenforceable even under the general law of contract.

18. The validity of such a contract was the Subject-matter of consideration in the case of Doleman & Sons v. Ossett Corporation, (1912) 3 K. B. 257: (81 L. J. K. b. 1092). Slight difference in the circumstances of that case and this does not effect the applicability of the principles pronounced therein.

19. The facts of the case are that the plaintiffs sued upon a contract made between themselves and the defendants, a Municipal Corporation for the construction of certain sewerage disposal works, in accordance with specifications, conditions, plans drawings and quantities prepared by defendants' engineer, to recover Burns alleged to be due to them from the defendants under the contract and damages for wrongful termination of the contract.

20. In Clause 32 of the contract were incorporated certain conditions which provided that 'in case of any dispute due or difference arising or happening touching or concerning the works of relating to quantities, qualities, description or manner of work done and executed oc to the quantity or quality of the materials employed oc in any wise whatsoever relating to the interest of the Corporation or of the contractor, they shall from time to time be referred to and be settled and decided by the engineer who shall be competent to enter upon subjeot-matter of such disputes with or without formal reference notice to the parties to the said contract or either of them and who shall judge, decide and determine thereon, and to the engineer shall also be referred the determination of the sum or sums or balance of money to be paid to or received from the contractor by the Corporation and the awards of the engineer shall be final and binding upon the Corporation and the contractor respectively.'

21. Two pleas were advanced by the defendant in the action: (i) the award is conclusive and binding on the plaintiff and that they are not entitled to reopen the matter thereby determined, (ii) alternatively, it is a condition precedent to this action that the matter aforesaid should be referred to and settled and decided by the said engineer (arbitrator). The plaintiff's, reply was

'At the date of the said alleged award thii notion was pending and previously thereto the defendant had taken eteps in the proceedings in the action which precluded them from frooeeding to arbitration upon any of the matters which are the subject of this action.' It was held by the Court that the award was not binding on the patty and could not conclude the suit.'

22. Fletcher-Moulton L. J. reviewed the position of the parties litigants in relation to arbitrations and awards obtained therein. With regard to an award obtained in an arbitration before suit his Lordship said:

'If a dispute has been brought before the private tribunal thus constituted, and an award made, that award is binding on both parties and concludes them as to that dispute. In effect the parties have agreed that the rights of the parties in respect of that dispute shall be as stated in the award, so that in essence it partakes or the character of 'accord and satisfaction by substituted agreement.' The original rights of the parties have disappeared and their place has been taken by their rights under the award.' (p. 267)

With regard to whether a party to a contract containing an arbitration clause was precluded thereby from appealing to a Court of law to enforce his right under the contract, he said;

'No provision in a contract which ousted the jurisdiction of the Courts of law could be valid but that a clause agreeing to refer disputes to arbitration was valid because it did not oust the jurisdiction of the Courts. In other words, they decided that the jurisdiction of the Courts to compel a defendant to appear before them, and their jurisdiction to pronounce finally and conclusively on the rights of the parties after due hearing, were left untouched by such a clause, or by the appointment of a specific arbitrator to decide the matter, or even by proceedings having been commenced under such a submission. Neither a general agreement to submit disputes to arbitration, nor the submission of the dispute in question to a particular arbitration, nor even the pendency of an arbitration thereon, could be pleaded in answer to a claim in an action.' (p. 267)

23. It has further been said:

'There cannot be two tribunals each with the jurisdiction to insist on deciding the lights of the parties and to compel them to accept its decision. To my mind this is clearly involved in the proposition that the Courts will not allow their jurisdiction to be ousted. Their jurisdiction is to hear and decide the matters of the action, and for a private tribunal to take that decision cut of their hands, and decide the questions itself, is a clear ouster of jurisdiction. Therefore to hold that the private tribunal is still effective alter the dispute has come before the Court would be to say that, in all oases in which Section 4, Arbitration Act, 1889, applies, the defendant may stitl loroe on an arbitration and, by obtaining an award from the arbitrators, oust the jurisdiction of the Courts to decide the question they have in hand. In each case where the Court has decided that it will retain in Its own hands the decision of the case, there would thns be a race between it and a private tribanul which should be the first to give a decision in the matter. The learned Judge had decided, that, if during the pendency of the action an award is obtained from the arbitrator, it can be pleaded in bar to the action, or, in other words, the decision of the arbitrator and not that of the Court, decides the rights of the parties. If this were good law, there would in every case be the raco between the public and private tribunals which I have described, and the decision of the- speediest would prevail. This would be ousting the jurisdiction of the Court in a most ignominious way.' (p. 269).

Farwell L. J. st page 374 observed :

'The King's Courts do not compete with arbitrators, or permit their own proceedings to be interfered with in any way by them ; when the defendant has submitted to the jurisdiction, he cannot withdraw without the leave of the Court, or the consent of his opponent. If this is not so, what would happen if the action and the arbitration go on together, and the plaintiff succeeds in his action, bat the arbitrator makes hia awasd on the same day in favour of the defendant Is one to be set off against the other, or which is to prevail? Or suppose that the arbitrator refrains from publishing his award in deference to a protest from the plaintiff who has succeeded in the action. Would such protest be a braaeh of the covenant to refer, and entitle the defendant to his action for damages against the plaintiff It appears to me impossible to allow more than one proceeding to continue without landing the Court and the parties in inextricable difficulties.'

24. I shall pause for a moment to consider the application of the principles enunciated in Doleman's case, (1919-3 K. B. 257 : 81 L. J. K. B. 1092), which has stood the test of time in England and has been followed in numerous Indian decisions notwithstanding the prominent difference between the facts of that case and the present. In that case the parties referred their future differences to arbitration. While the agreement was in force, one of the parties in disregard of it filed a suit relating to the subject-matter of reference. As in India so in England the other party, if he chooses to enforce the contract of reference, has to apply, to the Court before whom the suits pending under Section 4 Arbitration Act of 1889 (of England) corresponding to Section 34 of the Act which has replaced Rule 18 of the Second Schedule of the Code, to stay proceedings in the suit This application, has to be filed before defendant takes any steps in the suit. In India he has to do so before issues are framed. Failure to do so amounts to waiver of his right of enforcement of the con. tract of arbitrations. Thereafter, the arbitration proceeding even if it terminates in a completed award is of no avail to the defendant, Aa a plea in bar it is bad in law. The award is not binding as, to hold that the suit is concluded by the award tantamounts to snatching away the jurisdiction from Court. It is against public policy that the statutory tribunal should be running a race with a private tribunal and the speedier will win the race. It is a matter of public policy that the Court's jurisdiction should not be flouted. An arbitration agreement can be enforced with the leave and order of the Court and that by three ways, (i) by making the agreement a rule of Court (ii) by an order of reference by Court in a pending suit (iii) by asking the Court having jurisdiction to enforce an award. The Court has to be satisfied that there was a valid agreement to refer and that there was no misconduct or corruption in the proceedings and the like.

25. In the present case the parties had already submitted their differences to the jurisdiction of the statutory tribunal While adjudication by Court and in Court was pending, the parties started arbitration proceedings without leave of Court though the statute provides that such arbitrations shall be submitted to by an order of Court or consent of all parties. This also amounts to ouster of jurisdiction of Court and setting up two tribunals to run a race side by side. This offends against public policy and against jurisdiction of Court as such in one case as in the other Doctrines laid down in Doleman's case, (1912) 3 K. B. 257 : (81 L. J. K. B. 1092). fully apply to the present case. On the other hand, they apply with greater force and cogency. I shall not however, be understood to say that the arbitration proceeding and the award obtained therein are null and void but they shall not be allowed to supersede the trial. A Court can order supersession of arbitratora.and arbitrations and not vice versa.

26. It has been contended by the learned counsel for the opposite party that in case the necessary post-award consent that would make it enforceable as compromise bs lacking, it could be filed as an award and the Court could make necessary investigation into matters relevant in order to pass a judgment in terms thereof. The argument seems at the first instance very attractive. But on a little careful consideraticn, it is unsound. iN order to attract the provisions of the Arbitration Act which provide for review of an award by the Court, the reference--agreement must have been one falling into either of the three categories of reference to arbitration. It is somewhat difficult to find a parallel case in the judicial decision of the Indian Courts to serve as a precedent. But the English case of Darlington Wagon Co., Ltd. v. Harding, (1891) 1 Q. B. D. 245 : (60 L. J. Q. B. 110), is largely in point. In that case, the plaintiff company contractors for the erection of the pier sued the defendants for worka done under the contracts that had been entered into. In course of the trial it was agreed between the parties that an order of reference should be made and an order was drawn up by consent referring all matters in difference between the parties to an arbitrator. In one of the clauses of the order the costs of the pending suit and that of the reference and award was agreed to abide the event and in another clause it was also agreed that in the event of either of the parties disputing the validity of the said awarl the Court should have power to remit the matters thereby referred or any or either of them to the reconsideration of the arbitrator. By a subsequent agreement (without an order from Court) it was agreed between the parties that all claims and counterclaims and matters of dispute, between them should be referred to arbitrator as if the same have been in existence at the commencement of the action and have been the subject of the action. The arbitrator awarded that there was due from the defendants to the plaintiffs a sum of money largely exceeding the amount claimed in the action. The defendant filed an application in Gourt asking to set aside or remit the award of the arbitrator. The application was refused on the ground that the Court had no power to review the award. The reference in this case had been made before the Arbitration Act, 1889, which however had come into force at the time of the award-making. It was assumed that according to Section 25 of the Act it could be brought within its purview. Section 25 reads :

'This Act shall apply to an arbitration commended after the commencement of this Act under any agreement or order made before the commencement of this Act.'

Under the Act, the subject-matter of a suit could be referred, by an order of Court to an arbitrator under Section 14, Lord Eeher, M.R. who delivered the judgment of the Court observed :

'The question then is whether this ease can be brought within the scope of the Act. Section 14 gives power to refer in certain oases and we must consider whether thJB order could have been made under that section. I think, it could not. It is not a reference by the Judge of the whole cause or matter or of an; queation or issue of fact arising therein. It is an order made by consent for the reference of all matters in difference, That is a much larger order than any which a Judge has authority under the Act to make ...... The order was not therefore made under Section 14, even if by reason of Section 25, the case is brought within the Act...... The whole validity and force of the order of reference arises from the consent of the parties ...... It is obvious to my mind that the parties who consented to this order did not intend to operate under either Act. I have come therefore to the conclusion that there is no power to review the award.'

Similarly, in the present case, the parties' reference to arbitration was not in accordance with the provisions of the Arbitration Act. The Court, therefore, cannot take notice of the award except, if at all, under the proviso. The award will stand or fall on the basis of a post-award consent as an accord and satisfaction of the suit as between the parties.

27. Arbitration Acts 1889-1934 and the Supreme Court of Judicature Consolidation Act, 1925 comprise the entire law of arbitration prevalent in England just as arbitration (Protocol and Convention) Act, 1937, and the Arbitration Act, 1940 at present constitute the entire code of the law of arbitration in India. The scheme and the fundamental principles underlying the arbitration law in both the countries are almost the same. The Indian Arbitration Act, 1940, has gone to a very large extent, though not to the fullest extent, to implement the provisions relating to arbitration, either through or without the intervention of the Court, of the English Acts. On careful comparison, I have found that except for certain additional powers in Courts in England by which they can proceed either by attachment of properties by issuing writs of contempt of Court against a party who resiles from or revokes an agreement to refer to arbitration which has been made into a rule of Court on which is based upon an order of Court, the provisions of law are almost the same. As I have already shown from the reported cases cited above, the arbitration proceeding and an award obtained therein which do not strictly conform to the provisions of the Arbitration Acts are not recognized as good defence to a suit nor do the awards ex proprio vigore conclude determination of the subject-matter of the suit. As has been pointed out by one of the learned Judges Vaughan. Williams L. J. in Doleman A Sons' case, (1912-3 K. B. 257 : 81 L. J. K. B. 1092) who was dissentient in his raasons for the conclusion reached is that case, the plea upon executed award completed after action is allowed as a good plea as an accord and satisfaction. The learned Judge for this observation relied upon the case of Lowes v. Kermode, (1818) 6 Taunt 146 : (139 E. B. 339). This appears to be the view accepted in U. S. A. to be noticed presently. This to my mind appears to be nearly equivalent to what is laid down in the proviso of Section 47, Indian Arbitration Act, 1940.

28. As I have been telling all the while, the Legislature has prescribed specific ways and modus operand for enforcement of otherwise specifically unenforceable agreements for arbitration of disputes by a domestic tribunal and its decision; and that contracting out of such prescribed modes, either expressly or by implication, should be guarded against by Courts. In this connexion, I shall quote a paragraph from Quinton McGarel Hogg's Law of Arbitration, 1936 Edn. chap. IX, p. 113 :

'These provisions are so fundamental to the law of arbitration that it was held under the old Section 19 of the Act of 1889 that the patties could not contract out of them. An agreement between the parties not to require a consultative case or to apply to the Court (sic) order diretecting one was held void, and unenforceable [Re : Hunslok and Reinhotd, Pinner d Co., (1893) 1 Com. Cas 215 and Czarinikow Co Ltd v. Roth Sch--midt & Co. (1922) 2 K. B. 478 : (127 L. T. 824)].'

29. Quite a different approach to the question may be adverted to, namely, the favour which the Courts accord to an award of arbitrators is predicated upon the assumption that in the conduct of the arbitration the parties to the controversy bad a full and fair hearing and that the award is the honest decision of the arbitrators and involves no mistake so gross as to work manifest injustice and furnish misconduct of evidence on their part. Enforcement of an award must be in accord with this assumption. In America too, as in England, the Courts look and guard with great jealousy against the ouster of their jurisdiction. I shall quote a passage from Corpus Juris, vol. 5, p. 20 :

'While arbitration is now favoured by Courts and every reasonable presumption indulges to give effect to such proceed ings it is not to be understood that parties can, by agreements to arbitrate, oust the jurisdiction of the Courts over the matters submitted to arbitration .... parties will not be permitted, by agreement, to submit to arbitration to oust the jurisdiction of the Courts .... in other words, assume jurisdiction and determine the matters, in dispute which constitute the subject-matter of the agreements on the principle that the parties cannot deprive themselves of the right to resort to the proper legal tribunals for the submissionof their controversies.'

30. With regard to the effect of arbitration in a pending action, there has also been divergence of opinion of the Courts in America. The majority rale has been summed up in a few articles in Corpus Juris, vol. V, p. 48 et seq. The substance of it is that the submission of a cause of action to arbitration pending a suit thereon ipso facto works a discontinuance of a uit. The ground upon which the doctrine rests is that the parties have selected another tribunal, one of their own creation, to settle the controversy, and that they thereby to (sic) and do withdraw the cause from the Court. Where such a discontinuance is wrought the Court will not look beyond the submission. Likewise, it is not material whether the submission is valid or invalid. This discontinuance is not affected by a subsequent revocation of the submission. If the plaintiff after such submission does not voluntarily dismiss bis case, the defendant can compel him to do so by a motion setting up the submission or by answer in the nature of a plea in abatement. It is open to the parties while agreeing to the submissions pending suits to make an express reservation that the cause is to be retained in the docket until the arbitration is perfected by an award. This discontinuance, however, may be waived by a party by appearing at the trial of the cause and defending it. Such a submission of a pending cause without a rule of Court does not furnish sufficient ground for stay of proceedings in the cause though the parties may agree expressly to the contrary. In the former case, the defendant must plead the award pnis darrein continuance (a plea in which the defendant pleaded some matter of defence which had arisen 'since the last continuance' or adjournment). It may be noted here that under the Rules renting to the Practice of Supreme Court of Judicature in England Order 24, Rule 2 any ground of defence that arises after the defendant has delivered a statement of defence or after the time limited for bis doing so has expired, the defendant may within eight days after such ground of defence had arisen, or at any subsequent time by leave of the Court or a Judge, deliver a further defence setting for the same. In Doleman's case, (1912-3 K B. 257 : 81 J K. B. 1092), already referred to, Vaugban Williams L. J., in his dissentient reasoning, pointed out that a completed award in such a submission could be pleaded pending an action duis darrein continuance under Order 24, Rule 2 of the Supreme Court Bales. This, view, however, was not conceded to by the other two Lords Justices.

31. The minority rule in the United States is to the effect that mere submission to arbitration in a pending suit does not ipso facto work a discontinuance thereof. But an award would be necessary to work a discontinuance. Both the rules, however, agree that an award in submission of a pending cause to arbitration without rule of Court can be pleaded puts darrein continuance. With regard to the revocability, the rule that either party can revoke the submission at any time before an award his been made is too well settled to admit of doubt. Here too, it is stated (5 C. J. p. 53, Article 92) :

'the reason why the agreement was revocable under common law was not that arbitration was not favoured by it as tending to end litigation and not lor want of consideration as the ending of litigation was strong consideration, but because of that principle of law that parties could not, by agreement, oust the Courts of jurisdiction assigned them by law, and could not debar themselves from appealing to the law and tribunals of the land.'

32. It is apparent that in British Jurisprudence an award on the subject-matter of a pending action without rule of Court is not acknowledged as a valid plea while in America it gives rise to a successful plea of discontinuance of the suit and it produces the same result as if the plaintiff withdrew from the suit. Under both the systems of jurisprudence, however, the award can itself be the basis of a fresh cause of action. This, however, is something different from accepting the award as the final adjustment of the suit though according to the American view, the same result may ensue in an indirect way. On equity side of the jurisprudence of both the countries, different rules obtained. According to American View (Vide Article 616, 50. J.):

'Although a mete agreement to submit an arbitration oannot be specifically enforced, yet it is well settled that an award made in pursuance of such submission may be specifically enforced in equity where the thing awarded to he doneia such that a Court of equity would compel its specific performance if agreed on by the partlea themselves.'

33. The ground is that it is but an execution of the agreement of the parties ascertained and fixed by the arbitrators.

34. In England, a Court of Equity shall not enforce an award (which is not based on rule of Court) unless the parties acquiesced in the award.

35. Article, 618, 5 C. J. p. 228 :

'It was formerly held in England that equity wouldnot enforce an award unlese the parties had acquiescedin it, or agreed afterwards to have it executed, butthis distinction was afterwards overruled in Englandand has never been recognised as prevailing in theUnited States.'

36. In the case of Thompson v. Noel (1738) 1 Atk, 61 : 26 E. R. 40 Lord Chancellor held :

'A bill to carry an award into execution when there is no acquiescence in it by the parties to the submission or agreement by them afterwards to have it executed, would certainly not lie: Norton v. Mascal, (1687) 2 Oh. Bep. 804 : (23 E. R. 626); Webster v. Bishop, (1703) 2 Tarn 444 : (28 E. B. 884.')'

37. What is stated in Article 618 of 5 C. J., already quoted, to the effect that the rule in Thompson's case, (1738-1 Atk 61 : 26 B.R. 40) was afterwards overruled does not appear to be quite accurate. The statement seems to have been based on the decision of Wood v. Griffith, (1818) 37 E. E. 16 : (1 Wils Ch. 35). The report of that case, however, shows that both parties to the submission had given their consent to the execution, that is, specific performance of the award, though they differed later with regard to its meaning. On authority of Wood's cases, (1818) 37 E. R. 16 : (1 wils. Ch. 35) therefore, it could not be said that the rules laid down in Thompson's and Webster's cases, (1738 1 Atk 61 and 1703-2 vern 444) were overruled. The position that stands with regard to English Jurisprudence is that an award not obtained by rule of Court nor sought to be enforced in any of the manners provided for in the Arbitration Acts' 1889-1984 (of England) could not be accepted as art adjustment of the party's dispute for the purpose of its execution or enforcement unless the parties had acquiesced in it or agreed afterwards to have it executed.

38. In the background of the history of the legislation on the subject both in England and India, the fundamentals on which the entire fabric of the law of arbitration has been constructed and the basic principles by which to parties' liberty of contract ought, as a matter of public policy, to be limited, an award other, wise obtained within the meaning of the proviso to Section 47, oannot ipso facto work as an accord and satisfaction of the suit. It must be acquiesced in or agreed to be treated as such after it is made. The earlier agreement at the time of submission to treat the award if and when made as an adjustment is predicated on the assumption, as already stated above, that in the conduct of the arbitration the parties to the controversy had a full and fair hearing and that the award is the honest decision of the arbitrators and involves no mistake so gross as to work manifest injustice and furnish misconduct of evidence on their part. If the award ipso facto and without any further concurrence of all parties works as an adjustment of suit the party unwilling to abide by the award loses the benefit of an enquiry by the Court as to basic requirement of a valid award having been fulfilled in its obtainmenfc. To give effect to the anticipatocy contract to replace the post-award concurrence would work as if the party had contracted out of hia right to appeal to the Court of law of the land. Such contracting out is bad in law being against public policy.

39. I shall now read Section 47 of the Act :

'Subject to the provisions of Section 46, and save in so far as is otherwise provided by any law for the time being in force, the provisions of this Act shall apply to all arbitrations and to all proceedings thereunder ;

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

40. The provision is an enabling one and allows an award 'otherwise obtained' to be taken into consideration as a compromise or adjustment of a pending suit, provided all parties interested give consent to such consideration. The provision is not capable of any other construction. It is used, this consent is already there at the time of submission; but there is no doubt, from the fundamental nature of a contract of submission to arbitration as discussed above, that the contract is a revocable one. 'Contract to accept it as a compromise in the suit' cannot be, in anywise placed higher than a contract to abide by the affard which is indulged in every arbitration agreement. The Legislature, therefore, provides that after the award all the interested parties should ask the Court to consider it as an adjustment of a suit. The Court thereupon shall proceed under Order 33, Rule 3 and pass a decree thereon. The anticipatory consent is not only a contingent one bat also is on the assumption that every thing goes on well with the arbitration proceedings and the arbitrators. A party finding that the assumption pre-assumed did not materialise and there being no venue for correction in a proceeding under Order 33, Rule 3, Civil P. C., withholds his consent and he is at liberty to do. I have come across some Indian decisions that have partially dealt with arbitration out of Court during the pendency of a suit in which it was held that 'the reference and the award were bad for there could not be two conflicting jurisdictions relating to one and same matter' : vide Samba Dayasing's Commentary on the Law of Arbitration, Second Edition, para 292 at p. 247--referring to Gohram Sharribay v. Jumo Obhayo, A.i.r. (29) 1942 sind 41: (I.L.R. (1941) Ear. 570).

41. The American (U. S.) view that such a submission perfected in an award works out compulsory discontinuance of the suit is not without logical cogency but does not compare favourably with English view which the Indian Statutes embody and incorporate. The former is inconsistent with the fundamental theory that no party can oust jurisdiction of Court of law of the land by contract which though is acknowledged in U. S. Courts. Besides, it has the disadvantage that unless parties otherwise agree they are driven to a fresh proceeding for enforcement of the award. According to the view taken by me which is the settled view in British Courts, the parties are, by agreement free to treat the award as conclusive in the suit or the suit will have its normal course ending in a judgment and decree. The party which is guilty of breach of contract may be liable to indemnification of his adversary in a separate proceeding. That is, however, quite another matter. Section 47 of the Act, like Section 89, Civil P.C. contains the words 'save in so far as is otherwise provided by any law for the time being in force' The limitation clause governs the applicability of the provisions of the Act to arbitrations and proceedings theremmder. Order 23, Rule 3, Civil P. C., does not expressly provide for any mode of arbitration and hence it cannot be considered to be within 'any law for the time being in force.' Besides, it is law of procedure which prescribes the mode to ascertain the validity and enforceability an adjustment of compromise of the suit. It does not exclude the application of arbitration law to a proceeding set up by patties by their consent to settle the terms for their acceptance for the purpose. The proviso, however, is not hemmed in or circumscribed by any such limitation clause and it requires acquiescence or agreement after award that it should be taken into consideration as an adjustment of the subject-matter of the suit.

42. In the circumstances, I am unhesitatingly of opinion that the award set up by the opposite party cannot be treated as adjustment of the suit and there is no point in making any enquiry into the matter of its existence and the fact of its being obtained by a valid agreement of the parties. As the parties did not avail of the procedure of setting up the arbitration under order of Court, the suit must proceed in its normal course.

43. Before closing, I must record my appreciation of the learned trial Court's sound commonsense that led him to come to a correct decision in law notwithstanding the contrary decision of Madras High Court already referred to.

44. In the result, the civil revision is allowed with costs. The order of remand passed by the learned District Judge is reversed and the order of the learned Subordinate Judge is restored. The hearing fee is assessed at two gold mohurs.

Das, J.

45. I agree with the order proposed by my Lord the Chief Justice.

46. The question that arises in the case is whether an award obtained on an agreement for reference to arbitration between the parties, during the pendency of a suit and without any order from the Court is to be treated as an adjustment of the suit under Order 23, Rule 3 ipso facto and without a fresh consent between the parties given after the award. The decision really tarns upon the construction of the proviso to Section 47, Arbitration Act. Prior to the enactment of the Arbitration Act (Central Act x [10] of 1940), there was considerable difference of opinion in the various High Courts as to whether suoh an award operates ipso facto as a compromise. Excepting the High Courts of the Calcutta and Patna, all the other High Courts were of the view that the award operates ipso facto as a com promise under Order 23, Rule 3. See Gajendra. Singh v. Durga Sumari, A. I. R. (12) 1926 ALL. 603: (47 ALL. 637 P B-); Chantasappa v. Baslingayya, A.I.R. (H) 1927 Dim. 666 (61 Bom. 908 P, B.) ; Subbi Raju v. Venkata Rama Raju, (A. I. R. (15) 1928 Mad, 1035: (51 Mad. 800 F. B ); Rohimkanta V. Ra,jani Kanta, A. i. r. (22) 1935 Cal. 613; (151 I C. 661) and Bkimraj Kanailal farm v. Munin, A I R. (22) 1936 Pat. 243; (14 Pat. 799), The difference of opinion broadly turned upon the differing constructions put on Section 89 and Order 93, Rule 3, Civil P. C. According to one view, the effect of Section 89 was (apart from any other specific statutory pro visions 1 to prescribe Paras, so and 21 of Schedule II, Civil P. C., as the only method by which parties can proceed to arbitration when a suit is pending and by implication to render all proceedings by way of arbitration during the pendency of the auit otherwise than under the above provisions virtually invalid; while according to the other view the eaid provisions were only permissive and there was nothing in Section 89 to compel the contrary conclusion. With reference to Order 23, Rule 3, one view was that the agreement to be bound by a future award is in itself a compromise and that therefore the award results automatically in an adjustment of the suit while the other view was that though the award may be the ultimate result of an agreement, it is not an adjustment or compromise by agreement. As stated by the learned Judges in Rohinikanta v. Rajanikanta, A. I. !B. (91) 1931 Gal. 643: (161 I. C. 661) this view was:

'Reference to arbitration and award given by an arbitrator which award la not accepted by the parties does not appear on a plain view to come within the meaning of Order 23, Rule 3.'

Similarly it was stated in Bhimraj Kanailal firm v. Munia, (A. I. R. (22) 1936 Pat. 243: (16 pat. 799) that:

'If the parties come to the Coart with a out and dry statement that the matter in dispute between them baa bean adjusted, then Order 23. Rule 3 applies; bat If they come to the Court stating that it is true that they have referred the dispute to an arbitration, hut that they do not agree mutually to accept the decision which has been arrived at by another person, then the matter is no longer governed by Order 23, Rule 8 and In that case, there being no agreement, the matter mast be considered in the light of Schedule II. In fact Order 23, Rule 3 distinctly contemplates that if the agreement, compromise or satisfaction presented to the Court is St to be reaor-ded then and there, a decree in accordance therewith shall be passed. It ig obvious that an agreement to go to arbitration and accept the award is not of such nature that a ieoree can be passed in accordance therewith and the award which is ultimately made by the arbitration is in no sense a part of the agreement.'

47. It is in this state of conflict of law that Section 47, Arbitration Act has come to be enacted. It runa as follows:

'Subject to the provisions of Section 46, and save in so far as is otherwise provided by any law for the time being in foroe, the provisions of tbia Act shall apply to all arbitrations and to all proceedings thereunder:

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

48. This section by its proviso was obviously meant to settle the conflict in favour of the view taken by the High Courta of Calcutta and Patna. The proviso refers to an arbitration award obtained otherwise than under the provisions of the Act and this is irrespective of the question whether the provisions in chap. II are applicable to an arbitration in a pending auit. It is meant to provide that such an award is neither necessarily invalid, nor ipso facto operative as an adjustment of the suit; but that it can be taken into consideration by the Court, If the award on an agreement operated proprio vigors as a compromise, then under Order 23, Rule 3, there is no option left to the Court and if euoh an award is necessarily invalid, there is nothing to be taken into consideration. But the proviso also requires in terms, the consent of all the parties interested as a condition precedent for the exercise of the power to take the matter into consideration. It is to be noticed that the award cannot be taken into consideration on the application of one only of the parties nor by Court itself suo motu. The context indicates that the 'consent' specified in the proviso is a 'consent' given at the time when the matter is to be taken into consideration. It has been held however in Arumugha Mudaliar v. Balasubramania Mudaliar, A I. R. (32) 1945 Mad. 294 : (I. L. R. (1946) Mad. 39), that the word 'consent' in the proviso might equally well cover 'antecedent' consent given at the time when the parties agreed to refer the matter to arbitration. It has been suggested in that case that the parties may agree not only that the matter in dispute between them shall be decided by an arbitrator, but that they may agree in advance that the award so given will be accepted by them as binding. It is said that such an agreement satisfies the requirement of 'consent' specified in the proviso. With very great respect, the learned Judges bave failed to notice that suoh an agreement to treat the award as binding is effective as antecedent consent, the award itself is an adjustment and no option is available to the Court, except to pass a decree in terms of the award. But this is just what the proviso expressly meant to negative. It may also be noticed that the consent required under the proviso is the consent to take the award into consideration and not a consent to the award itself. The position, therefore, under the proviso appears to me to be this. An award pending a suit on an adjustment of the suit, proprio vigors or by virtue of any specific clause in the agreement to treat the award when given is binding. If the award is agreed to, after it is given, it operates as an adjustment and a decree in terms will have to follow under Order 23, Rule 3, and if the facts relevant to such a situation are disputed, they will have to be enquired into as in any disputed adjustment. If there is an award, and all the parties thereafter consent that it may be taken into consideration though they do not agree to the award itself then the Court will go into the merits of the award--presumably on grounds germane to arbitrations under the Act --and if satisfied, will treat the award as an adjustment and give effect to it as such underOrder 93, Rule 3.

49. I have, therefore, no hesitation in coming to the conclusion in agreement with my Lord the Chief Justice that an award in a pending suit is not a plea in bar and cannot operate to oust the jurisdiction of the Court to continue the proceedings in the suit and that it does not operate by itself as an accord and satisfaction of the olaim in the suit.

50. Whether after obtaining the award, daring the pendency of a suit, without intervention of the Court) the parties could rely on it, otherwise than under the proviso to Section 47, Arbitration Act. does not arise for consideration in this case. It is recognised that suoh an award is not altogether invalid. That an award not made a rule of Court, can be sued upon and can form the basis of rights and liabilities, is well recognised both in England and in India. (See Rani Bhagoti v. Ramchandan, 11 oal. 386: (19 I. A. 67 P. c ), and also the judgment of Marten C. J. in Chanbasappa v. Baslingayya, A. I. R. (14) 1927 Bom. 665: (51 Bom. 908 P.B.). Whether that continues to be so under the present Arbitration Act, depends on the construction of 8s. 31, 32 and 33 of the Act, on which there appears to be difference of opinion as disclosed in Moolckand Jothajee v. Bashid Jamshed, Sons & Co., A. I. R. (33) 1946 Mad. 346: (I. L. R. (1946) Mad. 840): Munshilal & Sons v. Modi Bros., 61 C. W. N. 563 and Suryanarayana Reddi v. Venkata Reddi, A. I. R. (95) 1948 Mad. 436: (I. L. R. (1949) Mad. 111). That such an award could be the basis of a suit for specific performance also appears from Section 30 of the Specific Relief Act. Whether this continues to be so under the present Act may require cousideration. If a remedy by way of suit on the award, or by way of specific performance is available, it may be open to the parties to file such a suit and ask for the pending suit to be stayed. The question as to whether the parties could invoke the provisions of the Arbitration Act itself to enforce the award (otherwise than under proviso to Section 47) does not appear to me to be altogether free from difficulty. There is very considerable force in the various circumstances pointed out by my Lord the Chief Justice, which justify the conclusion that the Act does not apply to such an award, without intervention of a Court in a pending suit. But it may be suggested on the other hand that there is nothing specific in the Act itself negativing its application. The Act itself as the premble shows is meant to consolidate and amend the entire law relating to arbitration. Section 47, in terms makes the provisions of the Act applicable to all arbit-rations. Ttiere appears to be nothing in S3. 14 to17 of the Act which renders them inapplicable to such an award though probably other sections are not quite appropriate. It cannot be said that the jurisdiction of the Court is ousted when under the said sections the Court is asked to examine the validity of the award and pass ft decree in terms thereof. The view that the appearance of an unseemly race between the arbitration and the Court is to be avoided has much in its favour to commend it. But on the other hand, if the only remedy of a party to an award so obtained is to plead it as an adjustment under proviso to Section 47, there might be great inconvenience in a case where an award deals with a number of matters--some involved in a suit and some outside it and one of the parties refuses to abide by it and the terms of the award are not separable. The modern tendency being in favourof upholding arbitrations, especiallyin the circumstances of this country, the matter requires further consideration than what I have found myself able to give, in the absence of any arguments from the bar. I would therefore prefer not to express any final opinion on the matter.

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