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T.S. Subbarao Vs. Appadurai Aiyar and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil;Property
CourtChennai
Decided On
Reported in(1925)48MLJ142
AppellantT.S. Subbarao
RespondentAppadurai Aiyar and ors.
Cases ReferredSeth Dooly Chand v. Mamuji Mussaji
Excerpt:
.....being a party to the suit, any decision against the plaintiff would be res judicata between the defendants 2 and 3 and the 4th defendant, for the defendants 2 and 3 set up a title by purchase from the 1st defendant and the plaintiff sets up a title as mortgagee from the 4th defendant. mamuji mussaji 21 cwn 387 makes the following observation :the entire foundation of the jurisdiction of the court is removed as soon as it is established that the parties have failed to comply with the fundamental requirements of the statute embodied in the first paragraph of the second schedule of the civil procedure code. but if he fails in the suit it is but fair and just that he should pay the defendant's costs of the proceedings both here and the lower appellate court as well as costs of the trial..........section 1 of schedule 2 of the civil procedure code is in these terms: 'where in any suit all the parties interested agree that any matter in difference between them shall be referred to arbitration, they may, at any time before judgment is pronounced, apply to the court for an order of reference.' the section requires that all the parties interested should agree before the court could make a valid reference to an arbitrator. the contention for the respondent is that the persons against whom relief is claimed are the only necessary parties and that pro forma parties may or may not be parties to the reference. it is also urged that the 4th defendant in this case who was ex parte was not interested in the suit inasmuch as the suit was only for possession of the property, and the 4th.....
Judgment:

Devadoss, J.

1. The plaintiff sues for possession of the plaint property alleging that he is the usufructuary mortgagee from the 3rd defendant. Defendants 1 and 2 claim the property as theirs. Both the Courts have dismissed the plaintiff's suit on the ground that in a previous suit O.S. No. 89 of 1916 the plaintiff sued for similar reliefs; and a reference was made to arbitration in that suit and an award was made by the arbitrator, and therefore the present suit is barred by reason of that award. The contention of Mr. Venkatrama Aiyar for the appellant is that the award was passed on a reference by the Court without jurisdiction inasmuch as all the persons interested in the suit did not join in the submission, and therefore the award' does not stand in the way of his obtaining relief in this suit. The facts appear to be : the plaintiff sued for possession of the property against defendants 2 and 3 in Suit No. 89 of 1916 who are defendants 1 and 2 herein and his mortgagor was the 4th defendant. Defendants 2 and 3 claimed title from the 1st defendant, and reference was made to arbitration by the plaintiff and defendants 1 to 3. 4th defendant remained ex parte and did not join the reference. An award was made by the arbitrator, but before the award could be made a decree of Court, the plaintiff withdrew the suit with liberty to bring a fresh suit. The District Munsif allowed him to withdraw the suit and gave him leave to bring a fresh suit. If the award is a valid award, no doubt it would be a bar to the present suit. The question is whether a reference to which all the persons interested are not parties is a valid reference. Section 1 of Schedule 2 of the Civil Procedure Code is in these terms: 'Where in any suit all the parties interested agree that any matter in difference between them shall be referred to arbitration, they may, at any time before judgment is pronounced, apply to the Court for an order of reference.' The section requires that all the parties interested should agree before the Court could make a valid reference to an arbitrator. The contention for the respondent is that the persons against whom relief is claimed are the only necessary parties and that pro forma parties may or may not be parties to the reference. It is also urged that the 4th defendant in this case who was ex parte was not interested in the suit inasmuch as the suit was only for possession of the property, and the 4th defendant being the mortgagor no relief was claimed against him by the plaintiff in the suit.

2. One of the main issues in the case was whether the properties belonged to the 4th defendant, or whether they belonged to the 1st defendant. It follows therefore that the 4th defendant was interested in the decision of the suit. If the plaintiff failed in making out title in the 4th defendant 4th defendant being a party to the suit, any decision against the plaintiff would be res judicata between the defendants 2 and 3 and the 4th defendant, for the defendants 2 and 3 set up a title by purchase from the 1st defendant and the plaintiff sets up a title as mortgagee from the 4th defendant. There was therefore a conflict of interest between the 4th defendant and the defendants 1 to 3. It cannot be said that the 4th defendant was not a party interested in the suit. 1 do not think that the words 'parties interested in the suit' should be restricted only to those persons against whom relief is claimed. A person against whom no relief is claimed may be interested in the result of the suit, inasmuch as his liability to the plaintiff may ultimately arise by reason of any decision that may be given in that suit. So far as the facts in O.S. No. 89 of 1916 are concerned there can be no hesitation in holding that the 4th defendant was vitally interested in the result of the plaintiff's suit, and therefore I consider that the contention of the respondent's vakil that the 4th defendant having been ex parte and the plaintiff having undertaken to prove the 4th defendant's title, 4th defendant was not an interested party cannot be accepted.

3. The next question is whether the reference without a party interested in the litigation joining in it is a valid reference. The view of the Allahabad High Court is that if the defendant is ex parte he need not be a necessary party.--vide Ajudhia Prasad v. Badar-ul-Hussain ILR (1917) A 489. But both the Calcutta High Court and the Madras High Court have taken the view that in order that a reference under the Civil Procedure Code, Schedule II, may be a valid reference, all the parties should join in the reference. In Seth Dooly Chand v. Mamuji Mussaji 21 CWN 387 the learned Chief Justice and Mukerjee, J., held that all the parties to the suit should join in asking the Court to refer the matter to arbitration. In other words, all the parties must be parties to the reference to arbitration. The learned Chief Justice observed at p. 391 : 'As I have said before, by reason of the fact that all the parties did not join in the application or did not agree to it this was an invalid reference.' This was followed by a Full Bench of this Court in Potita Pavana Panda v. Narasinga Panda : (1919)36MLJ538 The Allahabad High Court has taken the same view in Hasha v. Mahbub 10 INDCAS 559.

4. It is next contended on behalf of the respondent that the 4th defendant got the ex parte decree set aside, appeared before the arbitrator and signed the compromise, and therefore it must be taken that his subsequent consent to the arbitration gave validity to the reference. 4th defendant no doubt had the ex parte decree set aside, and he and defendants 2 and 3 signed the compromise before the arbitrator, but the plaintiff was not a party to the compromise. Though time was given to his Vakil, he did not appear before the arbitrator and sign the compromise. Whether a person who was not a party to the reference can subsequently appear before the arbitrator and give his consent to the arbitration proceedings and thereby make the reference valid is a question which is not altogether free from difficulty. This point was considered in Favaguddin v. Aminuddin (1909) 6 ALJ 351 in, the case of a reference to arbitration under the old Civil Procedure Code. It was held that 'where a suit was referred to two arbitrators, and an umpire was nominated and agreed upon by the parties, but the latter refused to act, the Court has no jurisdiction to appoint an umpire in his place, if the parties did not consent to such appointment, and that the reference to such arbitration was invalid and that subsequent acquiescence of the parties in the proceedings of the arbitrators would not validate the reference if it was made by the Court without jurisdiction.' The reference to arbitration is by the consent of the parties. In order to make a valid reference it is necessary that all the parties should give their consent. But after a reference is made, subsequent consent by one of the parties who did not join in the reference at the time it was made cannot make the proceedings valid for the foundation of the Court's jurisdiction is the consent of all the parties. Mukerjee, J. in Seth Dooly Chand v. Mamuji Mussaji 21 CWN 387 makes the following observation : 'The entire foundation of the jurisdiction of the Court is removed as soon as it is established that the parties have failed to comply with the fundamental requirements of the statute embodied in the first paragraph of the second Schedule of the Civil Procedure Code.' What gives the Court jurisdiction to refer the matter to arbitration is consent of all the parties. Consent subsequently given cannot give jurisdiction to the Court which it did not possess at the time when it referred the matter to arbitration.

5. It is next contended that it is only an irregularity and therefore the irregularity has been cured by the subsequent consent. But as I have already held reference without the consent of all the parties to the arbitration is not merely an irregularity but it takes away altogether the foundation of the Court's jurisdiction. That being so, the award is absolutely void. That is to say the Court can treat it as if it never existed.

6. The third objection urged by the respondent's Vakil is that it is necessary that the award should be set aside before' the plaintiff could bring his suit. Inasmuch as the award is absolutely void as having been passed on a reference by a Court which acted without jurisdiction I think it is unnecessary to consider this objection at length.

7. It is also contended that inasmuch as the proceedings were illegal the Court had power to set aside the proceedings and proceed with the suit. But unfortunately for the respondent the Court did not proceed with the suit but allowed the plaintiff to withdraw the suit with liberty to bring a fresh suit. I say unfortunately advisedly because the District Munsif ought to have set aside the award when he found that the 4th defendant was not a party to it and should have either dismissed the plaintiff's suit or should have proceeded with the suit. But he allowed the plaintiff to withdraw the suit the moment he came forward with a request to that effect. ! therefore hold that the award in the previous suit, O.S. No. 89 of 1916 is no bar to the present suit.

8. In the result the decrees of the lower Courts are set aside and the suit remanded for trial to the District Munsif's Court for disposal according to law. Considering the conduct of the plaintiff in having consented to the reference to arbitration and afterwards having suddenly withdrawn the suit when he found that the award was against him, I think he ought not to get the costs of these proceedings, that is costs of the appeal and of second appeal in case he were to succeed in the suit. In any event he should not get costs of the suit. But if he fails in the suit it is but fair and just that he should pay the defendant's costs of the proceedings both here and the Lower Appellate Court as well as costs of the Trial Court.

9. The Court-fee will be refunded.


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