G.K. Misra, J.
1. Mr. Khan raised two contentions-
(i) The Registered Award (Ex. 1) dated 10-7-1958 is unenforceable under Section 23 of the Contract Act as the arbitration agreement intended to stifle criminal prosecution; and
(ii) The Award was not made a rule of the Court under Section 14 of the Arbitration Act, 1940 (hereinafter referred to as the Act), and, as such, it cannot he relied upon for enforcing rights arising thereunder.
Many issues had been raised in the trial Court. Most of them have been abandoned. As no other contention has been urged in second appeal, facts relevant to the aforesaid two contentions need only be mentioned.
2. It is now the admitted case of the parties that Sulla Gouda adopted defendant Gobinda Gouda. He had executed a registered adoption deed (Ex. A) dated 12-4-1955 in evidence of the adoption. Later on there were differences between them. On 27-5-1958 they executed an arbitration agreement (Ex. B) conferring authority on Sarpanch Krushna Chandra Das to effect a partition between them. On 10-7-1958, the arbitrator passed an award (Ex. 1) which was registered dividing the properties equally between them. Ka schedule property fell to the share of Sulla and Kha schedule to that of the defendant. The Award was, however, not made a rule of the Court under Section 14 of the Act. On 31-12-1958 Sulla Gouda executed a registered deed of gift (Ex. 2) in favour of Kalu Gouda (plaintiff 1) conveying the lands covered by Ka schedule in the Award which is the subject-matter of this suit. Sulla died in January 1959. On 9-2-1959 plaintiff 1 executed a registered sale-deed (Ex. 3) in respect of a portion of the property out of the Ka sch. in the Award in favour of Rahaso Goudani (plaintiff 2).
The case of the plaintiffs is that though the award was not made a rule of the Court, it was acted upon. The properties were divided by metes and bounds, Sulla and the defendant respectively possessed Ka and Kha schedules of land as allotted to them under the Award. After the registered deed of gift, plaintiff 1 was in possession of the property gifted to him by Sulla. A proceeding under Section 145, Cr. P. C. in respect of the suit land terminated in favour of the defendant on 30-11-1960. The suit was accordingly filed for declaring plaintiffs' title and possession in respect of the suit land and for recovery of the deposit made in the Criminal Court and for subsequent mesne profits.
Defendant took the plea that the Award was not made a rule of the Court, was not acted upon, Sulla and the defendant continued in joint possession of the entire Ka and Kha schedule properties, referred to in the Award, and that on the death of Sulla, defendant is entitled to the entire properties. Absolutely no allegation was made in the written statement that the arbitration agreement was to stifle criminal prosecution.
3. The learned trial Court recorded the following findings:
(i) Partition was effected between Sulla and the defendant only by the award and not by any other independent act; and
(ii) Certain criminal offences were pending between Sulla and defendant and those were sought to be compromised by arbitration agreement. The Award given on the basis of such an agreement is invalid and unenforceable.
On the aforesaid findings the learned Munsif dismissed the plaintiffs' suit.
4. The learned lower appellate Court decreed the suit on the following findings-
(i) Though the award was not made a rule of the Court, the arbitrator divided the properties into two equal shares allotting Ka schedule to Sulla and Kha Sch. to the defendant. They possessed the land allotted to them separately in accordance with the Award. After the deed of gift, plaintiff 1 possessed Ka schedule land. The parties thus remained in separate possession of the lands allotted to them. The Award and the deed of gift were acted upon.
(ii) There is no proof that any non-compoundable criminal litigation was pending between Sulla and the defendant. There was thus no agreement to stifle criminal prosecution and in fact Ex. B does not refer to any criminal case.
5. The contention that the arbitration agreement intended to stifle criminal prosecution is wholly without substance and should not have been permitted to be raised by the Courts below. Law is well settled that the onus is on the party challenging the validity of the transaction to show that it is based upon an agreement to stifle prosecution. It must be shown that there was an agreement between the parties that certain consideration should proceed from the accused to the complainant in return for the promise of the latter to discontinue the Criminal proceeding. Such a transaction would be opposed to public policy Under Section 23 of the Contract Act. The party on whom the onus rests must discharge it by proof of clear and satisfactory evidence. See AIR 1965 SC 166, Ouseph Poulo v. Catholic Union Bank.
No averment was at all made in the written statement that the arbitration agreement intended to stifle criminal prosecution. The question--whether there was an agreement to stific Cr. prosecution--is a mixed question of law and fact. No such question can be permitted to be raised merely at the stage of arguments without inviting an issue on the point. That apart, the learned lower appellate Court was perfectly justified in his observation that there were no satisfactory materials in support of the conclusion of the trial Court. This contention must therefore be rejected.
6. The finding of the lower appellate: Court on full discussion of the evidence that the arbitrator divided the entire properties in 2 equal halves by metes and bounds in the award allotting Ka sch. to Sulla and Kha sch. to the defendant, and that in accordance with the allotment the parties continued in separate and exclusive possession of the properties is a pure finding of fact, and cannot be assailed in second appeal.
On this finding, the law, as laid down by the Supreme Court in AIR 1961 SC 1077,Kashinathsa v. Narsingasa, fully applies to this case. In that case, it had been contended that if an Award, made on a private reference to arbitration, had not been filed under Section 14 of the Act and had not been made a rule of the Court, it cannot have any effect or validity for enforcing any right on its basis. Their Lordships examined the conflict of authorities but did not think it necessary to express a final opinion on the disputed question.
7. The Supreme Court decision however gives a conclusive answer that if the Award is acted upon and the rights of parties determined in the award are given effect to by their consent, parties can enforce the new rights i'n the basis of the acting upon even though the Award has not been made a rule of the Court. The pertinent observations of their Lordships may be extracted:
'It may be sufficient to observe that where an award made in arbitration out of Court is accepted by the parties and it is acted upon voluntarily and a suit is therefore sought to be filed by one of the parties ignoring the acts done in pursuance of the acceptance of the award, the defence that the suit is not maintainable is not founded on the plea that there is an award which bars the suit, but that the parties have by mutual agreement settled the dispute, and that the agreement and the subsequent actings of the parties are binding. By setting up a defence in the present case that there has been a division of the property and the parties have entered into possession of the properties allotted, defendant 1 is not seeking to obtain a decision upon existence, effect or validity of an award. He is merely seeking to set up a plea that the property was divided by consent of parties. Such a plea is, in our judgment, not precluded by anything contained in the Arbitration Act'.
8. The aforesaid principle has full application to this case. Plaintiffs' suit is to be decreed on the fooling that by consent of parties, their properties were divided equally by metes and bounds by the arbitrator as mentioned in the Award, that the Award was acted upon and in accordance with the division Sulla and defendant were in separate and exclusive possession of Ka and Kha schedule lands respectively in their own right, title and interest The cause of action for the suit is not based on the award but is based on the fresh rights arising out of partition by metes and bounds made with the consent of parties and the separate enjoyment of properties in accordance with the division. Though the learned lower appellate Court was not alive to the aforesaid principle of law, his ultimate conclusion is, unassailable.
9. In the result, the second appeal failsand is dismissed with costs.