Gaddipatti Laxminarayana and others vs Gangineni Venkata Subbaiah and others

Srinivasachari, J.—These revisions have been preferred against the order of the Subordinate Judge, Tenali, passed in Civil Miscellaneous Appeals filed before him against the order of the District Munsif, Tenali, in O. P. Nos. 10 of 1952, 11 of 1952 and 12 of 1952 filed before him under Ss. 30 and 33 of the Indian Arbitration Act.

One Gangineni Anjaiah obtained a transfer of a decree for possession passed in O. S. No. 156 of 1938, and sought to execute the decree. The transfer was recognised. Later the matter relating to the execution of the decree was preferred to arbitration. The arbitrators gave an award. Objections were raised to the award and an application was filed to set aside the award. This was the subject-matter of O. P. No..11 of 1952.

The same Gangineni Anjaiah obtained a decree for possession and for mesne profits and proceeded to execute the decree, when the parties referred the matters in dispute to arbitration. An award was given which is sought to be set aside. O. P. No. 10 of 1952 relates to this matter.

The third O. P. No. 12 of 1952 was filed to set aside an award passed which was also passed on a reference made to arbitration of matters in dispute in execution proceedings initiated by the transferee of the decree and going on, relating to a decree for possession and mesne profits.

In all the above matters, the arbitrators passed awards declaring that the decrees which were being executed had been satisfied. These awards were attacked inter-alia on the ground that matters in execution proceedings could not be referred to arbitration and the arbitrators having had no jurisdiction to hear these disputes, their awards were liable to be set aside. The District Munsif upheld this contention and on this sole ground set aside the awards.

The aggrieved parties filed miscellaneous appeals and the appellate Court differed from the trial Court and held that the reference was valid, and allowed by law. He farther held that if for any reason the reference to arbitration of matters in execution proceedings was not allowed by law, such reference was validated by the award being treated as 5 compromise or adjustment of the dispute between the parties. The appeals were allowed and the order of the lower Court set aside. Revisions have been filed against the above judgment.

Learned counsel appearing for the petitioners argues that the provisions of S. 21 of the Arbitration Act were clear that only matters relating to suit could be referred to arbitration and execution proceedings could never be regarded as partaking of the nature of a suit. As regards the second ground relied upon by the lower Court, learned counsel contends that an award passed on an invalid reference could not be relied upon as an adjustment or compromise where there is no consent of one of the parlies to such an award.

Section 21 of the Arbitration Act, which governs this case makes provision for making references to arbitration in pending suits. It reads as follows:

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.

This section in substance reproduces paragraph ( of Sch. II of the Civil Procedure Code. The sign ficance and the import of the words ''in the suit has been the subject of judicial discussion. Gen rally by suit is meant a civil proceeding initiat(sic) by the presentation of plaint. The word ''suit'' h(sic) been held to include an appeal as it is only a co(sic) tinuation of suit. The question has arisen wi reference to S. 141, C. P. C, as to what proceedings could be regarded as miscellaneous proceedings within the meaning of that Section. Section 141 reads as follows;

The procedure provided in this Code in regard to suits shall be followed, as far as it can be ma applicable, in all proceedings in any Court of Ci(sic) jurisdiction.

That Section as would be clear from its word speaks only of miscellaneous proceedings, proceedings other than a regular suit. It is now settled t(sic) the proceedings referred to in S. 141 though not j(sic) taking of the nature of a suit are proceedings, (sic) ginal in character such as proceedings initiated the grant of probate, succession certificate and si(sic)lar proceedings. Vide Thakur Pershad v. Fal rulla, 22 Ind App 44 (A).

The question as to whether by force of S. J C. P. C., proceedings in execution could not be(sic)garded as coming within the category of a suit c:(sic)up for consideration before the Privy Council in same case. The question arose under S. 647 of Code of 1882 which reads as follows:

The procedure herein prescribed shall be lowed so far as it can be made applicable in proceedings in any court of civil jurisdiction o than suits and appeals.

There was a conflict of view as to whether proceedings in execution could be regarded as ''proceed other than suits or appeals'' coming within S. of Act XIV of 1882. The Privy Council obse(sic)in the above case that the proceedings spoken(sic)S. 647 did not include execution proceedings. W(sic)the matter was before their Lordships an expl(sic)tion to the above section was added which sj(sic)fically said that the section did not apply to plication for the execution of decrees.

The addition of the explanation according their Lordships did not make any difference, their Lordships expressed the view that the an(sic)ment merely expressed the true meaning of the Procedure Code. It is clear that S. 141, C. P. C would not include proceedings in execution.

Looked at from another point of view proceedings in a suit cannot include proceedings execution, for a suit embraces all proceedings terminate in a decree and the proceedings (sic)ing to the enforcement of the decree are proceedings which are quite different and distinct proceedings in the suit itself.

Under Schedule II of the Code of Procedure which related to arbitrations, which stantially corresponded to S. 21 of the Arbit Act, Act X of 1940, it was always held that (sic)ters of dispute arising in proceedings in exe(sic) could not be referred to arbitration. Under Civil Procedure Code, provisions relating to are not applicable to all proceedings. The ci(sic)relating to execution proceedings is self-cont(sic)

We, are, therefore, of the opinion, that proceedings in execution cannot be the subject of (sic)ence to arbitration. Broadly speaking any which a Civil Court is competent to gran which is enforceable by a suit may be grant the arbitrators.

The next point to be considered is whether an award obtained in execution proceedings (sic)uld be regarded as operating as an adjustment (sic)the decree falling under O. 21, R. 2 or a compromise coming under O. 23, R. 3, C. P. C. The relevant provision of the Arbitration Act which may i(sic) regarded as lending support to this view is S. 47 the Arbitration Act which reads as follows: "Subject to the provisions of S. 46 and save so far as is otherwise provided by any law for 3 time being in force, the provisions of this Act all apply to all arbitrations and to all proceedings thereunder :

Provided that an arbitration award otherwise (sic)tained may with the consent of all the parties(sic)erested be taken into consideration as com(sic)mise or adjustment of a suit by any Court be(sic)e which the suit is pending." (sic)e proviso makes it clear that the award may regarded as a compromise or adjustment of a (sic)t if all the parties interested consent to the (sic)ird. The consent that is required is consent at time when the award comes up for considera (sic)i; the fact that originally the reference to arbi(sic)ion was made by consent of the parties inte-(sic)ed would not satisfy the requirements of the pro-(sic)

The consent referred to in the proviso must something other than the consent to refer the (sic)ter to arbitration in order that the award may taken into consideration as a compromise or an (sic)tstment of a suit. It must be acquiesced in or (sic)sed to to be treated as an adjustment. The (sic)sent of all interested parties is a sine qua non (sic)icting upon the award and recording it as a promise or adjustment of the matter in dispute.

There was, however, a conflict of deci(sic) between Bombay, Allahabad and Madras High (sic)rts on the one hand and Calcutta and Lahore he other. The Bombay and the other Courts (sic)ing the same view held that a valid reference ''sic)pending suit followed by an award operated as adjustment of the suit while the Calcutta High (sic)t held a contrary view. These were cases (sic)r S. 89 and Schedule II of the Civil Procedure Code. But after the Arbitration Act, the conflict (sic):s to have any importance in the face of the (sic) words in S. 47 of the Act.

That the trend of decisions has been only to effect would be clear from the decisions of Allahabad High Court and Patna High Court Moradhwaj Vs. Bhudar Das, and Raghunandan Rai and Others Vs. Sukhlal Rai, (sic)r as the Madras High Court is concerned the (sic)ase that deals with this matter was Full Bench of Penmetcha Subbaraju Vs. Penmetcha Venkatramaraju, . This was a case which arose before the Arbi-(sic)i Act of 1940 was passed. In this case the Bench was of the opinion that where the par(sic)iferred the matters in dispute to arbitration & (sic)ard is made a decree in terms of the award be passed by the Court under O. 23, R. 3, C., though the parties do not accept the Philips J., who delivered the judgment bench observed: (sic), however, the award satisfies the provisions (sic)23, R. 3, C. P. C, there is no provision in CPC which expressly takes the rights of the parties to proceed in ac(sic) jce with the section." after the Arbitration Act came into force the was, considered in the case of V.S.A. Arumuga Mudaliar Vs. V.S.P. Balasubramania Mudaliar and Others, ). Leach C. J., relying on the above Full Bench Judgment held that an agreement to accept a future award could be treated as a compromise in the suit. The antecedent consent was regarded as enough consent for the purposes of the proviso to S. 47 of the Arbitration Act.

Later on, Viswanatha Sastry J., had occasion to consider the same matter in Palaniyandi Chetti and Others Vs. Kandappa Goundan, and the learned Judge felt doubtful about the correctness of the decision in the previous case viz. V.S.A. Arumuga Mudaliar Vs. V.S.P. Balasubramania Mudaliar and Others, but felt that he was bound by the bench judgment. The conflict, if any, so far as the Madras High Court is concerned has been set at rest by the Full Bench decision in Abdul Rahman Sahib Vs. Muhammad Siddig and Another, Venkatarama Jyer J., who delivered the Full Bench judgment while interpreting the proviso to S. 47 of the Arbitration Act observed in these terms:

The consent here referred to must be something other than the consent to refer the dispute to arbitration.

and expressed the opinion that the views expressed in V.S.A. Arumuga Mudaliar Vs. V.S.P. Balasubramania Mudaliar and Others, did not give sufficient weight to the words with the consent of all the parties interested.'' This judgment is binding upon us. Obviously the consent required under the proviso is the consent to take the award into consideration for purposes of recording an adjustment. If the award is agreed to after it is given it operates as an adjustment.

The result is that these revisions must be allowed with costs throughout.