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P.L.S.S. Ramanathan Chettiar and ors. Vs. K.M.V.V. Kumarappa Chettiar - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Reported inAIR1940Mad650
AppellantP.L.S.S. Ramanathan Chettiar and ors.
RespondentK.M.V.V. Kumarappa Chettiar
Cases ReferredJamma Bai v. Basant Rao A.I.R.
Excerpt:
- - it was asserted on behalf of the plaintiff that, although the matter was referred to a private arbitration for the first time in 1935, the award given by the arbitrators was invalid and as the plaintiff was not satisfied with it, the subject-matter of the suit along with the question of the validity of the first award were referred to a second arbitration by the parties on 2nd april 1936 and resulted in the award ex. i am not satisfied in the present case that the claim could not have been adjusted otherwise than by referring the dispute to arbitration. the suit for dissolution and accounts must for the above reasons be held to have been satisfied......by him that this objection might not be available to the same guardian who had agreed to refer the suit to arbitration. he relied on certain observations made in golnur bibi v. abdus samad : air1931cal211 and chennakesavulu v. veerasami a.i.r. (1933) mad. 862, in that connexion. the case in chennakesavulu v. veerasami a.i.r. (1933) mad. 862 is by a single judge of this court and simply follows the calcutta case. the learned judges of the calcutta high court had held that if some guardians who had agreed to refer the matter to arbitration subsequently turned round after the award was made and wished to appeal against the decree passed in terms of the award, they would not be entitled to do so as the decree passed on that basis was not void but voidable at the option of the minor and that.....
Judgment:

Abdur Rahman, J.

1. These appeals arise out of an order passed by the Subordinate Judge of Sivaganga on two applications, one made on behalf of the plaintiff and the other on behalf of the defendants under Order 23, Rule 3, Civil P.C. with the allegations that the parties had referred the matter in suit, which was one for dissolution of partnership and accounts, to two arbitrations which resulted in two awards. The earlier which held the plaintiff to be entitled to recover Rs. 30,000 was pleaded on behalf of the defendants and the later under which the defendants were found to be liable to the extent of Rs. 52,000 was pleaded by the plaintiff. Since it has been settled by a Full Bench of this Court in Subbaraju v. Venkataramaraju A.I.R. (1928) Mad. 1025 that where in a suit parties have referred their difference to arbitration without an order of the Court and an award is made, a decree in terms of the award can be passed by the Court under Order 23, Rule 3, Civil P.C. the only question for decision in this case is whether the subject-matter of the suit had been so adjusted between the parties. It was asserted on behalf of the plaintiff that, although the matter was referred to a private arbitration for the first time in 1935, the award given by the arbitrators was invalid and as the plaintiff was not satisfied with it, the subject-matter of the suit along with the question of the validity of the first award were referred to a second arbitration by the parties on 2nd April 1936 and resulted in the award Ex. A, under which the plaintiff was entitled to get a sum of Rs. 52,000, instead of Rs. 30,000 as ordered in the previous arbitration. It was also alleged that the defendants had accepted the later award, signed it in token of their acceptance, executed four hundis for the amount to which the plaintiff was found to be entitled by the arbitrators and delivered them to the plaintiff. He therefore applied to the Court for the adjustment and satisfaction to be recorded and the suit to be dismissed.

2. Various objections were raised by the defendants to this award although the factum of reference and the existence of a second award were not denied. No evidence was however let in on their behalf to substantiate their contentions and the learned Counsel for the appellants has therefore confined himself to certain legal objections which have to be determined in these appeals. I might state at once that in view of the plaintiff's application, it would be unnecessary to consider the award or adjustment relied upon by the defendants in their application (I.A No. 414 of 1935) unless I come to the conclusion that in view of the legal objections stressed on behalf of the defendants the second award and satisfaction urged on behalf of the plaintiff could not be sustained. If I arrive, on the other hand, at a finding that the satisfaction pleaded on behalf of the plaintiff was unassailable, the first award or adjustment must be taken to have been superseded by the later award and satisfaction.

3. The first legal objection raised on behalf of the defendants is that inasmuch as there were minors who were also defendants in the suit, the matter in dispute could not have been referred to arbitration or compromise under the provisions of Order 32, Rule 7, Civil P.C. without the leave of the Court. There is considerable force in this objection so far as it goes. No application appears to have been made to the Court in which the suit was pending for leave to refer the matter to arbitration on behalf of the minors. Even after the award was made, the guardian ad litem made no application to the Court for granting him leave to compromise the matter in suit. In the absence of any application for leave, the Court was not and could not have been called upon to consider whether the compromise was beneficial to the minors and the compromise could not therefore be forced on the minors even if the Court happened to consider it to be beneficial in their interest : see Ranga Rao v. Rajagopala Raju (1899) 22 Mad. 378, Gulab Dei v. Vaish Motor Co. Etawah : AIR1925All570 , Veerappa Chettiar v. Veluswami Thevar A.I.R. (1933) Rang. 186, Hemangini Dasi v. Bhagwati Sundari Dasi : AIR1923Cal685 and In re Birchall, Wilson v. Birchall (1881) 16 Ch. D. 41, The learned Advocate-General who appeared for the respondent did not oppose this contention seriously, although it was argued by him that this objection might not be available to the same guardian who had agreed to refer the suit to arbitration. He relied on certain observations made in Golnur Bibi v. Abdus Samad : AIR1931Cal211 and Chennakesavulu v. Veerasami A.I.R. (1933) Mad. 862, in that connexion. The case in Chennakesavulu v. Veerasami A.I.R. (1933) Mad. 862 is by a Single Judge of this Court and simply follows the Calcutta case. The learned Judges of the Calcutta High Court had held that if some guardians who had agreed to refer the matter to arbitration subsequently turned round after the award was made and wished to appeal against the decree passed in terms of the award, they would not be entitled to do so as the decree passed on that basis was not void but voidable at the option of the minor and that no other party could call it in question except the minor either on attaining majority or before then through another next friend.

4. The question before me does not relate to the competency of the appeal. Nor have I been called upon in this case to consider the validity of the reference made by the guardian on behalf of the minors without the leave of the Court, as it appears from the application presented on behalf of the plaintiff that the matter was referred to arbitration only by defendants 2 and 4 for themselves and by defendant 2 on behalf of defendant 3 as his agent, and there is no reference to the minors either in the application or in the award Ex. A which is on the record. If it were not so, I feel with great deference to the learned Judges who decided the Calcutta case that the question of legality of reference and that of an award could be raised on behalf of the minors by the same guardians both in the suit and even in the appeal; but as there is no necessity to decide the point here, it is unnecessary to examine the question in any detail. In the absence of any reference to the minors in the award, the lower Court's finding that they (the minors) would be bound by the award unless they got it set aside must be held to be incorrect and is therefore set aside.

5. It has however been contended that in view of Sub-clause (2) of Order 32, Rule 7, which declares an agreement of reference and even a compromise entered into without the leave of the Court not only void as against minors but also voidable against all the parties to the suit and since the defendants have ex. pressed themselves unequivocably by pleading the defence that they were not bound by the compromise, it should be held to be wholly ineffectual. It is quite true that the words employed in Sub-clause (2) are capable of this construction but the interpretation which I have been asked to put on them is, in my opinion, unreasonable and should not be accepted. The whole object of enacting this rule was that a next friend or a guardian should not enter into any agreement in regard to the subject-matter of the suit or compromise without the leave of the Court. This rule is undoubtedly wholesome. Sub-clause (2) was merely providing the penalty when the next friend or guardian acted in contravention of the provisions of Sub-clause (1). If a guardian did in spite of this prohibition, enter into an agreement or a compromise on behalf of a minor, without obtaining such leave they would be voidable against all the parties and presumably not at their option but at the option of the minors. The (use of the word 'against' in this sub-clause is important and must not be overlooked. It could not have been the intention of the Legislature to have given this option to the very persons who may enter into an agreement or a compromise in contravention of the rule with a next friend or a guardian of a minor. They must be presumed to have knowledge that they were dealing with a minor's guardian who has had no leave from the Court and cannot be permitted to take advantage of the situation if they find that an arbitrator has gone against them or that a compromise appeared subsequently to be more detrimental than what they thought it would be in the beginning. It is only the minor who is unable to guard his own interests and has to depend upon the bona fides and vigilance of other persons.

6. It is therefore the minor alone who can be held entitled to resile from the agreement or compromise, if he may choose it fit to do so, either on attaining majority or even before through his next friend or guardian. The Sub-clause (1) only contemplates two parties one of which is the minor and the other persons who have entered into a contract with the minor through his guardian. As between these two parties the contract is stated to be voidable against them and not at their option. This interpretation can be supported by a decision of their Lordships of the Privy Council in Jamma Bai v. Basant Rao A.I.R. (1916) P.C. 2 where a bond executed as a part of a compromise of a suit jointly on behalf of a minor and by another was held to be unenforceable against the minor but this fact did not absolve the other executant from her obligations under the bond. The agreement of reference or compromise would have been in this particular case voidable at the option of the minors if they were parties to the agreement but as stated above the reference and the compromise were by adult defendants alone and the minors were no parties to either. There is thus no force in the contention that the compromise should be held to be of no force against the other defendants if it was found to be not binding on the minors.

7. The second question which has been raised by the learned Counsel for the appellant is that defendant 2 was not authorized on behalf of defendant 3 to refer the matter to arbitration. The plaintiff on the other hand placed his reliance on the power of attorney executed by defendant 3 in favour of defendant 2 (Ex. 2). Mr. Sitarama Rao contends however that the power of attorney has to be construed strictly and must be examined with care in order to ascertain whether the act done by the agent was fairly within the scope of his authority. This is correct and bearing this rule of construction in mind I would have to examine the document. A reference to the power of attorney shows that defendant 3 had authorized defendant 2 to settle, liquidate or adjust all accounts existing between the defendants and any other person. There was no power authorizing defendant 2 to refer the matter o arbitration. Moreover, the words used in the power of attorney indicate that authority was being given to defendant 2 to adjust, and the authority could not therefore in the absence of any other words to the contrary in the power of attorney, be delegated on the principle underlying the maxim delegata potestas non potest delegari. It is quite legitimate for a principal to expect that if he gives the power to an agent to adjust, the agent would exercise his own judgment in the matter and not agree to be bound by the judgment of someone else whom the principal did not know. The learned Advocate-General however urged that the power to adjust expressly granted should include the power to refer to arbitration as it was necessary for accomplishing the object for which the power was granted expressly. It was also argued that business could not be conducted without the existence of this power and defendant 2 should therefore be held to be bound by the award. I am not satisfied in the present case that the claim could not have been adjusted otherwise than by referring the dispute to arbitration. Nor was I struck by the second reason given by the learned Advocate General. I do not agree that the business could not have been conducted without the existence of this power. I would therefore agree with the contention raised by the learned Counsel for the appellant that defendant 3 would not, in the circumstances, be bound by the reference to arbitration entered into by defendant 2 on his behalf.

8. The objections raised on behalf of the other defendants 2 and 4 however stand on a different footing. They had not only referred the matter to arbitration but also signed the award in token of acceptance and cannot now be permitted to pick holes in it. The plea of coercion or undue influence raised on their behalf was not even substantiated by them. It must be remembered that we are dealing with Nattukottai Chetties in this case. The plaintiff is much younger in age than defendant 2 and it is extremely unlikely that he might have been able to exercise the pressure on defendants 2 and 4 which has been imputed to him. The allegation that the defendants were not capable of understanding the nature of the document they were signing is almost in-conceivable. Moreover, after the award was pronounced by the arbitrator, defendant 2 executed four hundis for no less than a sum of Rs. 52,000 in accordance with their decision and delivered them to the plaintiff. They cannot now be heard to say that the reference and the award were invalid and not binding [on them or that the dispute between the parties had not been adjusted. The case might have presented some difficulty if the plaintiff had not agreed to be bound by the settlement in case defendant 3 was not found to have authorized defendant 2, as held by me already to refer the matter to arbitration; but since he had accepted the hundis executed by defendant 2 in full satisfaction of his claim it may be taken that he hoped to be able to recover the amount due from defendant 2. The learned Advocate-General also indicated during his arguments that even if I came to an adverse finding in regard to his contention about defendant 3, his client would nevertheless be willing to press his application for adjustment and satisfaction to be recorded and the suit dismissed in consequence.

9. I have already held that the later award has not been shown to be invalid and is binding on defendants 2 and 4. Moreover, it was not only accepted by them but in pursuance of it four hundis were executed and delivered by defendant 2 to the plaintiff. It has thus passed beyond the domain of an award. The first award which formed the subject of the application presented by the defendants need not therefore be considered and must be found to have been superseded. The suit for dissolution and accounts must for the above reasons be held to have been satisfied. The result is that these appeals must be dismissed. But in view of the fact that the lower Court's finding in regard to the minors and in regard to defendant 3 has not been upheld, the proper order in regard to costs appears to be that the parties should bear their own in this Court.


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