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Mohammad Zackriah Sahib Vs. Chinnappan Alias Subramania Mudaliar and ors. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtChennai High Court
Decided On
Reported in(1969)2MLJ649
AppellantMohammad Zackriah Sahib
RespondentChinnappan Alias Subramania Mudaliar and ors.
Cases ReferredKashinath v. Narasingsa
Excerpt:
- .....on 14th november, 1959 the second defendant filed i.a.no. 1964 of 1959 under order 23, rule 3, civil procedure code, impleading the plaintiff as sole respondent for the passing of a decree in terms of the award. to this proceedings, again, the first defendant was not a party. the plaintiff contested this application on several grounds. inter alia we need only note the grounds that the panchayat was without reference from court, that order 23, rule 3, civil procedure code, did not apply, and that in any event, the plaintiff had not later accepted the award, or his liability to pay rs. 4,200 to the second defendant. it has to be carefully noted that this repudiation by the plaintiff was made, as soon as he had an opportunity to file a counter-statement in i.a. no. 1964 of 1959 filed by.....
Judgment:

M. Anantanarayanan, C.J.

1. In order to elucidate the precise issue that arises for my determination, in this second appeal and related civil revision proceeding, in which both proceedings the plaintiff is the appellant and petitioner, the following facts are essential.

2. Certain property was owned by the first defendant, and on 6th December, 1958 the plaintiff entered into an agreement with the first defendant for the purchase of the suit property for Rs. 2,500. He paid Rs. l,000 as advance and undertook to pay the balance of Rs. 1,500 in forty five days. The stipulation was that the first defendant should execute the sale deed in his favour.

3. Admittedly, on 12th December, 1958, the first defendant sold the suit property to the second defendant for Rs. 3,000 under a document of sale. The plaintiff filed the present suit, out of which these proceedings arise, viz., O.S.No. 70 of 1959, in the Court of the District Munsif, Tiruppattur, for specific performance of the agreement in his favour, dated 6th December, 1958, impleading both the owner of the property (first defendant) and the subsequent alienee (second defendant). The second defendant filed his written statement in the suit, but the first defendant chose to remain ex parte. Issues were framed, and, subsequent to the framing of the issues, on 12th April, 1959, the litigating parties, viz., the plaintiff and the second defendant, without any reference to Court or from Court, convened a panchayat of nine members and executed a muchilika in their favour agreeing to abide by the decision of the panchayatdars. It has to be carefully noted that first defendant was not a party to this arbitral proceeding, although he had received Rs. 1,000 as advance from the plaintiff.

4. On the same date, the panchayatdars made an award, under which, they decided that plaintiff should pay Rs. 4,200 to the second defendant within fifty days, and the second defendant thereupon was to be constrained to execute a sale deed in favour of the plaintiff. Admittedly, this award is signed by the arbitrators, and the parties have also signed after the text of the award, and preceding the signature of the witnesses. The plaintiff did not pay the amount of Rs. 4,200 to the second defendant.

5. On 14th November, 1959 the second defendant filed I.A.No. 1964 of 1959 under Order 23, Rule 3, Civil Procedure Code, impleading the plaintiff as sole respondent for the passing of a decree in terms of the award. To this proceedings, again, the first defendant was not a party. The plaintiff contested this application on several grounds. Inter alia we need only note the grounds that the Panchayat was without reference from Court, that Order 23, Rule 3, Civil Procedure Code, did not apply, and that in any event, the plaintiff had not later accepted the award, or his liability to pay Rs. 4,200 to the second defendant. It has to be carefully noted that this repudiation by the plaintiff was made, as soon as he had an opportunity to file a counter-statement in I.A. No. 1964 of 1959 filed by the second defendant. I.A. No. 1964 of 1959 was ultimately allowed by the learned District Munsif, and O.S. No. 70 of 1959 the suit instituted by the plaintiff for specific performance was dismissed.

6. This is the essential history. The subsequent events merely explain how the second appeal and the civil revision proceeding have arisen. It is seen from the record that C.M.A. No. 44 of 1960 (renumbered as C.M.A. No. 89 of 1960) was filed in the Subordinate Judge's Court, Vellore, against the order in I.A.No. 1964 of 1959 and That against the dismissal of O.S. No. 70 of 1959 a first appeal was similarly instituted, viz., A.S.No. 469 of 1960. The learned Subordinate Judge originally allowed both A.S.No. 469 of 1960 and C.M.A.No. 89 of 1960 and the proceedings came up to this Court in C.M.A. No. 75 of 1962 and C.R.P. No. 365 of 1962. Venkatadri, J., allowed both these proceedings, but, admittedly, he did not finally dispose of the litigation; he remanded the proceeding to the Sub-Court, for fresh trial. After the disposal of the proceedings after remand, the plaintiff has filed S.A.No. 1219 of 1965 and C.R.P. No. 1780 of 1965 against A.S. No. 211 of 1964 and C.M.A.No. 21 of 1964, respectively.

7. The simple contention of learned Counsel for the plaintiff (Thiru. V.V. Raghavan) is that, on the facts of the record, and applying the relevant legal principles, it is impossible to hold that the plaintiff subsequently acquiesced in the award, in any way, either by any direct consent, or even by necessary implication arising from his consent. On the contrary, apart from his signature at the bottom of the award, there is nothing to show that he accepted the award, at any moment after it was promulgated by the arbitrators. Indeed, he repudiated the award, in explicit terms, the moment he had an opportunity to nuke a representation in I.A. No. 1964 of 1959 on the relevant and applicable principles the Court should hold that the award cannot be binding on the plaintiff, and he should hence, be relegated to his remedy in the suit for specific performance, O.S.No. 70 of 1959, which has been erroneously dismissed. Several authorities are relied on for the principles themselves including the Full Bench decision of this Court in Abdul Rahman v. Md. Siddiq, particularly in relation to the proviso to Section 47 of the Arbitration Act (X of 1940). This is the simple matter that arises for my determination, both in the second appeal and in the civil revision proceeding.

8. As I have just now stated, Abdul Rahman v. Md. Siddiq (1953) 1 M.L.J. 795 : I.L.R. (1953) Mad. 677 deals with the proviso to Section 47 of the Arbitration Act, and the principles upon which it should be applied to any given set of facts. Section 47 and the proviso are in the following terms:

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.

9. The facts are very clear. There was a pending suit, and, with regard to the subject-matter of controversy an arbitration award was otherwise obtained, and without any reference from Court or to Court, on the initiative of the parties. Assuming that the proviso to Section 47 applies to this award, it could certainly be regarded as a compromise of the suit under Order 23, Rule 3, Civil Procedure Code. After a discussion, in detail of the relevant principles and authorities, the learned Judges of the Full Bench concluded as follows:

We are accordingly of opinion that under the proviso to Section 47, an arbitration award obtained otherwise than in proceedings taken in accordance with the Act cannot without more (emphasise mine) be recognised as a compromise or adjustment of the suit; that no decree can be passed thereon under the provision of Order 23, Rule 3, Civil Procedure Code.... But if after an award is made, the parties thereto agree to accept it, that will be a compromise and a decree based thereon could be passed under Order 23, Rule 3.

10. The principle having been so explicitly enunciated, the simple question before me is whether the facts justify the application of this principle and the invocation of Order 23 Rule 3, Civil Procedure Code, to the present case.

11. In this matter, what is really essential is a careful examination of the alleged consent to the award by the plaintiff, which is being relied on by the second defendant who has been strenuously contending, throughout, that the plaintiff can act only in terms of the award, by paying the consideration of Rs. 4,200 to him and taking a sale deed, and that the suit of the plaintiff for specific performance cannot be further tried or pressed. Actually, if the record is carefully scrutinised, from this angle, all that we find is the text of the award itself, in which, after the signatures of the Panchayatdars, we find a subscription to the effect that the two parties, including the plaintiff, accept the terms of the award. This is followed by the signatures of the witnesses. In my view, it is inconceivable that any argument could be sustained that this subscription of the parties is not a part of the document of the award. Indisputably it is, and it is not even an endorsement to the award in the strict sense, because the signatures of the witnesses follow the subscription, and do not precede it. I shall later comment on the absence of any evidence whatever to show that, subsequent to the award, the plaintiff approbated, it either by express affirmation or by any conduct. But, on the assumption that there is no such evidence, it is impossible to hold that this subscription amounts to an acceptance of the award or ' its terms made or signified after the award itself had been made. It is very difficult now to appreciate the forces playing upon the parties, which induced the plaintiff as well as the second defendant to affix their signatures to the subscription which is a part of the award. According to the plaintiff he has been coerced into affixing his signature, and the award was not even read out to him. Actually, it is quite unnecessry to proceed into those averments. At the time when the award was made the plaintiff certainly did sign the subscription which is included in the document of award. But he appears to have recanted subsequently and as soon as he had an opportunity to make a representation, he emphatically repudiated the award. On the basis of the Full Bench decision it is impossible to hold that, in this view, there could be any decree of the suit under Order 23, Rule 3, Civil Procedure Code, on the basis of such an award, having regard to the terms of the proviso to Section 47 of the Arbitration Act.

12. Certain other precedents have also been placed before me, one of which is a judgment of Shearer, J., in Zeauddin v. Abdur Rafique : AIR1952Pat66 , I do not find that this decision takes the matter any further. Certainly it does not detract from the force of the observations of the learned Judges of the Full Bench. Learned Counsel for the second defendant has also relied on the dicta of Umamahes Waram, J., in Salima Bibi v. Mohammed Ibrahim (1961) 2 A.W.R. 96: A.I.R. 1962 A.P. 123. This decision merely enunciates that it is not necessary that a party to be bound by the award as a compromise under Order 23, Rule 3, Civil Procedure Code, should consent to the award at the time when the compromise petition is taken up for consideration by the Court. Obviously, such a proposition is unexceptionable as the party could well have approbated the award, or unmistakably signified his acquiescence by conduct, after the award was made, and before the matter is formally enquired into by Court. Actually the learned Judge (Umamaheswaram, J.) has referred to the Full Bench decision of this Court in Abdul Rehman v. Mohammed Siddiq I.L.R. (1953) Mad. 677 : (1953) 1 M.L.J. 795, and also to the judgment of Shearer, J., that I have referred to. The learned Judge of the Andhra Pradesh High Court did not dissent from the observations of the Full Bench. I am unable to see how this decision can help the second defendant unless he is able to show pieces of evidence during the period between the completion of the award and the enquiry by the Court into the application under Order 23, Rule 3, Civil Procedure Code, which do establish that the plaintiff subsequently affirmed the award, or approbated it by his conduct.

13. On the contrary, some light is thrown upon the true principles, to such a matter by certain observations of the Supreme Court in Kashinath v. Narasingsa : [1961]3SCR792 . Their Lordships stated as follows:

It may be sufficient to observe that where an award made in arbitration out of Courtis accepted by the parties and it is acted upon voluntarily and a suit is thereafter 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.

14. Certainly a party may be estopped from seeking to contest the award, either by any express affirmation or acceptance subsequently made, or by subsequent conduct, which would clearly show that the award had been acted upon by the party contesting the award. In the present case, for instance the plaintiff was in possession as lessee of the property previous to the original agreement of conveyance in his favour and he has retained that possession throughout. If, for instance, he had surrendered possession to the second defendant, after the award, and before the application under Order 23, Rule 3, Civil Procedure Code, that would be valuable and clear evidence of approbating the award by conduct.

15. Some reference has been made to two criminal cases, respectively filed by the parties, which do not seem to have been subsequently pressed there is a reference in the award to the contemplated withdrawal of those cases. But it is quite impossible to hold, on the records, that this signifies any conduct, on the part of the plaintiff, acquiescing in the award, or acting upon it; that criminal complaint might have failed, or might not have been pressed, for many reasons, including a lack of foundation or the necessary evidence. In brief, there is nothing except the signature of the party in the award, and that, in my view, cannot be conceivably construed as a subsequent acceptance of the award.

16. It follows, therefore, that both the second appeal and the related civil revision proceeding must be allowed and that the suit of the plaintiff for specific performance (O.S. No. 70 of 1959) to which the second defendant is a party, must now be taken up and tried on the merits. In this suit, the second defendant appears to take up the position, which he is perfectly entitled in law to do, that he is a subsequent and bona fide transferee for value, without notice of the prior agreement to convey, whose rights will have to be protected by Court on those facts, if established. Of course, I am saying nothing whatever about the merits of this aspect of the controversy which has still to be tried out, in the light of the evidence and the probabilities.

17. No order as to cost. No leave.


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