1. This case is really the aftermath of a previous suit which ended in an abortive attempt at arbitration. The original action (O.S. No. 59 of 1926, on the file of the District Munsif of Ongole) was brought by presumptive reversioners for a declaration of their rights in properties in the possession of a widow and a minor. One of the questions arising in that suit was the genuineness of a will. The decision of that question apparently involved certain disclosures which are alleged to have been likely to embarrass the karnam of the village. As a result of this anticipated embarrassment, the village officers engineered a compromise. It is found as a fact by the lower Court that there was a definite agreement as to the terms of this compromise, and that the parties decided that it would be best to have this compromise embodied in the award of an arbitrator on a reference by the Court. Consequently, an application for reference to arbitration, which is Ex. A in the present proceedings, was drafted and signed by both the parties and filed in Court. Apparently both the parties and the learned District Munsif overlooked the, fact that according to the terms of Ex. A, questions of possession and pecuniary compensation, which were not in issue in the suit, were to be referred to the arbitrator. The Court referred the suit and the arbitrator made the award. Objections were raised to the award on the grounds (a) that it was procured by fraud and (b) that it went outside the subject-matter of the suit. No decision was given on the fraud question, and the Court decided that the award went beyond the scope of the suit and could not therefore form the basis of a decree. The suit, O.S. No. 59 of 1926, was then decided on the merits and resulted in a decree and an appeal. While that suit was pending, the present suit was filed, wherein the plaintiff seeks possession of properties allotted to them by the decision of the arbitrator, or in the alternative a declaration that they have a reversionary right therein. The suit is in fact based on the abortive reference to arbitration as evidence of an agreement between the parties capable of separate enforcement by suit.
2. There are two questions now before me in this second appeal. One is whether the plaintiffs are entitled to enforce as an extra judicial agreement between the parties, for allotment of properties by the arbitrator, what was in form and fact an agreement to refer matters through Court to an arbitrator with a view to the termination of the suit, which scheme has become abortive. The other question is whether there was fraud as alleged so as to vitiate the agreement. I will deal first with the purely legal question, as to the possibility of making an abortive reference to arbitration through Court the foundation of a separate suit as on a private agreement. The plaintiffs who are the appellants base their arguments mainly on the decision reported in Narayana Iyengar v. Trippayya 1926 Mad. 366, where it was held that when there was a reference to arbitration through Court and a separate agreement by the parties that the arbitrators should deal with matters not within the scope of the suit, though the award is invalid under para. 15 read in the light of para. 3, Schedule 2, Civil P.C., yet the agreement between the parties, that these matters outside the suit should be settled by the arbitrator is binding upon them and it may form the subject of a separate suit. With reverence to that ruling, it must be observed that in the present case there is really no-agreement subsequent to the agreement to refer matters to arbitration. The agreement embodied in Ex. A is essentially an agreement by the party to get both the matter in suit and some matters out of suit decided by the arbitrator through the Court, with a view to put an end to the pending litigation.
3. I have heard the arguments of both sides at considerable length, and after careful consideration, I am definitely of opinion that this agreement does not provide for any settlement of matters by the arbitrator, apart from the pending suit. The essence of the agreement is that both the plaintiffs and the defendant were anxious to determine the litigation without further expense, and on that consideration, they agreed that the arbitrator on reference through Court should decide the question of the rights of parties including the rights to possession and pecuniary compensation. Apart from this reference through Court, there was no agreement at all, and if the reference through Court broke down, the prospect of putting an end to the litigation ceased, and the whole foundation of the agreement goes, and there is nothing loft which can be enforced, I take it that this is the line of thought which must have formed the basis for the decision in Bodachari v. Muniyachari 1921 Mad. 709, wherein a Bench of this Court, in a similar case found that
an award under an invalid reference being itself invalid gives no rights either as an award or as a compromise.
4. It has been argued that the authority of this case is taken by a Full Bench decision, Subbaraju v. Venkatarama Raju 1928 Mad. 1025, wherein it is held that Section 89, Civil P.C., is not a bar to a decree in terms of an award based on an extra judicial reference to arbitration being passed in a pending suit. It is true that their Lordships consider Bodachari v. Muniyachari 1921 Mad. 709 and dissent from it so far as it relates to the applicability of a bar under Section 89 of the Civil Procedure Code to the recording of a compromise as a result of an extra judicial reference to arbitration, but there is no dissent from the decision in the previous paragraph of the judgment in Bodachari v. Muniyachari 1921 Mad. 709, to the effect that the award under an invalid reference being itself invalid, gives no rights either as an award or as a compromise. It seems to me that the decision in Bodachari v. Muniyachari 1921 Mad. 709 must rest on the logical conclusion that though an agreement to compromise a suit may be enforced in separate proceedings, there can be no such agreement, for a private compromise when the whole tenor of the agreement in question contemplates an award through the intervention of the Court. The position is, of course, quite different) when, as in Narayana Iyengar v. Trippayya 1926 Mad. 366 referred to above, there is a separate private agreement for the decision of additional questions by the arbitrator. In this view I must hold that the view taken by the Courts below that the reference to arbitration was vitiated by illegality at its inception and that the award based solely on such an illegal reference cannot be enforced by a suit is correct.
5. It is unnecessary therefore to go into the further question of the correctness of the decision based on fraud, but I must observe that the finding of the lower Court in the matter of fraud seems to be based on allegations quite different from those which we find in defendant 1's written statement. The plea of defendant 1 expressly was that there was a conspiracy between the arbitrator and the village officers to pass an award different from that which the parties themselves had agreed upon at the time when this more or less formal application for reference to arbitration was made in Court. The case of fraud as presented actually in the lower Courts, seems to have been a conspiracy by the plaintiffs to induce the defendants to sign a reference to arbitration with the idea of getting an award different from that which had been agreed upon. The evidence before the lower Court seems to me to contain very little to justify m finding that the arbitrator himself had fraudulently conspired to give an unjust award, and I am of opinion that the Courts below should not have found fraud based on allegations different from those which were pleaded. In the view however which I have taken on the first point the appeal fails and is dismissed with costs.