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Kissen Gopal Nathani Vs. Murlidhar Chowdhury - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtKolkata High Court
Decided On
Case NumberSuit No. 1539 of 1956
Judge
Reported inAIR1962Cal581
ActsArbitration Act, 1940 - Sections 20, 21 and 23
AppellantKissen Gopal Nathani
RespondentMurlidhar Chowdhury
Appellant AdvocateS. Tebriwalla, Adv.
Respondent AdvocateR.M. Dutt, Adv. for Respondent No. 1 and ;J.C. Dutt, Adv. for Respondent No. 2
DispositionApplication dismissed
Cases ReferredGhulam Jilani v. Md. Hassan
Excerpt:
- .....the order for reference? 'section 21 of the arbitration act provides; 'where in any suit 'all the parties interested' agree that any matter in difference between them in the suit shall be referred to arbitration, 'they' may at any time before judgment is pronounced apply in writing to the court for an order of reference.' 2. it is contended on behalf of the applicant that as all the parties have entered into an arbitration agreement in writing the requirements of the act are duly satisfied and if now one of the parties opposes the application for deference that should not prevent the court from referring the suit to arbitration. an agreement to refer disputes in a suit to arbitration is a lawful agreement and should be given effect to. it is further said that the word 'they' occurring.....
Judgment:

U.C. Law, J.

1. This is an application under Section 21 of the Arbitration Act, 1940, for an order of reference in a pending Suit No. 1539 of 1956 of this Court. On 7th June, 1956 this suit was filed by Kissen Gopal Nathani against Murlidhar Chowdhuri and johurmul Jugalkishore for recovery of a certain sum of money. It appears that by a document in writing dated 3rd August, 1960 all the parties in this suit appointed Chiranjilal Mahuwalja as sole Arbitrator in respect of this suit and agreed to refer the dispute between them to him for arbitration. An unofficial translation of this document is annexed to the petition have directed the applicant to file an official translation of the document in due course. Kissen Gopal is now disputing this agreement. For the purpose of this application I shall assume (without deciding) that Kissen Gopal did enter into the aforesaid agreement and shall dealwith this application on that footing. On the strength of this document Muralidhar has taken out this application for an order of reference under Section 21 of the Arbitration Act. Jugal Kishore is supporting him but Kissen Gopal opposes this application. Question is can the court make the order for reference?

'Section 21 of the Arbitration Act provides;

'Where in any suit 'all the parties interested' agree that any matter in difference between them in the suit shall be referred to arbitration, 'they' may at any time before judgment is pronounced apply in writing to the court for an order of reference.'

2. It is contended on behalf of the applicant that as all the parties have entered into an arbitration agreement in writing the requirements of the Act are duly satisfied and if now one of the parties opposes the application for deference that should not prevent the court from referring the suit to arbitration. An agreement to refer disputes in a suit to arbitration is a lawful agreement and should be given effect to. It is further said that the word 'they' occurring in the latter portion of the section should be construed to mean 'they or any of them' and Section 13 of the General Clauses Act may in this connection be referred to. Lastly, it was contended that the Original Side Rules, which provide that the application must be signed by all parties, are but rules framed under Section 44 of the Arbitration Act and necessarily must be consistent with the Act. Therefore, if the Act gives certain right, that cannot be taken away by the rules framed under it.

3. I am told by the learned advocate for the applicant that never before had a situation arisen where a party agreeing in writing to refer the dispute to arbitration had tried to back out and as such no court had occasion to consider the question from that aspect of the matter. Be that as it may, to me it seems, however, that the law on this subject is quite clear. Section 21 of the Arbitration Act is clear and unambiguous and there is no room for construction. The word 'they' can only refer to the words 'all the parties interested' occurring at the beginning of the section. It seems to me that the legislators used the word 'they' in the section advisedly. If they wanted 'they' to mean 'they or any of them' there was nothing to prevent them from saying so in the section itself as was done in Section 20 of the Act where 'they or any of them' were used. I do not think there is any substance in the learned advocate's contention on the construction of this section and it would not be worthwhile to enlarge on this point any more.

4. It is well settled that a contract in writing to refer to arbitration matters in dispute in a pending suit is legal. Legal in the sense that it is not illegal to enter into such an agreement as it does not oust the jurisdiction of the court and is not in restraint of legal proceedings. Section 21 of the Act itself recognises such agreement as legal and its object lawful. But that does not mean that such a contract is enforceable by any of the parties except as provided in the Arbitration Act. Section 21 of the Specific Relief Act provides that no contract to refer 'present or future differences' to arbitration shall be specifically enforced. It has further been held that such a contract is not an adjustment or compromise of the suit and cannot be enforced under Order 23, Rule 3 of the Code of Civil Procedure (See Tincowri v. Fakir Chand, ILR 30 Cal 218, Jugal-das Damodar Modi and Co. v. Purusottam Umedbhai : AIR1953Cal690 .

5. No doubt a contract in writing to refer dispute in a pending suit is an arbitration agreement to which the provisions of the Arbitration Act apply and is therefore not specifically enforceable save as provided in the Act. Section 20 of the Act obviously is not applicable where a suit is pending. Section 34 is not applicable either. The only section under which such a contract can be enforced is Section 21 of the Act on the 'joint' application of all the parties for an order of reference by the court ( : AIR1953Cal690 , Bachawat, J.). The decisions in the following cases Parsidh Marain Singh v. Ghanshyam Narain, 9 Cal WN 873, Laduram v. Nandlal, ILR 47 Cal 555 : (AIR 1920 Cal 113 (2)) (FB), ILR 30 Cal 218, also support the view that an application for reference to arbitration in a pending suit must be made by all the parties interested. In Umed Singh v. Sobhag Mal, 43 Ind App 1 : (AIR 1915 PC 79), the ratio decidendi was also the assent of all the parties at the time of the making of the order for reference.

6. Ghulam Jilani v. Md. Hassan, 29 Ind App 51 (PC), held that the agreement to refer the matter in difference in the suit is a condition of the reference but the actual reference is the order of the court. Therefore, if the parties to a pending suit agree to refer their dispute and proceed to arbitration without an order for reference by the court, the arbitration is not under the provision of the Act and the award made would be illegal, invalid and not enforceable under the Act. In the light of the above decisions I have come to a clear conclusion that the jurisdiction of the court to make an order for reference in pending suit is founded upon the agreement amongst all the interested parties that the dispute between them shall be referred to arbitration and also they must all apply to court for making an order for reference. The concurrence of all the parties interested at the time of the presentation of the application to refer a pending suit to arbitration can only give jurisdiction to the court to make the order for reference and not otherwise.

'If all the parties interested do not apply and yetan order of reference is made, the order is illegal becausemade without jurisdiction'. (ILR 47 Cal 555 at p. 567 :(AIR 1920 Cal 113 (2) at pp. 114-115), Mookerjee, J.)

7. As regards the last point of the learned advocate for the applicant, I have merely to observe that the Rules and Forms of the Original Side which provide that the application must be made by all the parties interested are fully consistent with the Act.

8. In the present application one of the parties interested is not concurring to the order of reference but is opposing the application. I am inclined to hold that even after agreeing to refer, either party has locus poenitentiae to withdraw before the order of reference is made.

9. In these circumstances I am of the opinion that the court has got no jurisdiction to make the order of reference in the absence of the consent of all the parties interested to the application for reference to arbitration.

10. The application is dismissed with costs. Certified for counsel.


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