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Babu Prasad Jha And Others v. Mahabir Jha And Another
Summary of Opinion (Sarjoo Prasad, J.)
Factual and Procedural Background
This appeal was brought by the plaintiffs against an order refusing to set aside an award made on reference to arbitration. The plaintiffs' counsel advanced two principal contentions: (1) that the award was invalid because minors were parties to the reference and the court had not properly complied with Order 32, Rule 7 of the Code of Civil Procedure when granting permission to the guardians to enter into the agreement for reference to arbitration; and (2) that the matter should be remanded because the plaintiffs were not given an opportunity to examine the arbitrator who made the award.
Relevant factual and procedural points recorded in the opinion: plaintiffs 3 and 4 were minors represented by their father (plaintiff 1) as next friend; defendant 2 was a minor represented by a pleader as guardian ad litem. On 3-7-1947 a joint application was filed for reference to arbitration to Babu Janki Raman Prasad Misser. No petition for leave under O.32, R.7 was filed on 3-7-1947. On 7-7-1947 the next friend of the minor plaintiffs and the guardian ad litem of the minor defendant filed a petition seeking permission to enter into the agreement for reference to arbitration; the Court recorded an order granting permission and subsequently passed an order referring the case to arbitration. The Subordinate Judge later refused to set aside the award, and the plaintiffs appealed that refusal; the appeal was dismissed with costs.
Legal Issues Presented
- Whether the award (and the reference to arbitration) was invalid because minors were parties and there was alleged non-compliance with Order 32, Rule 7 of the Code of Civil Procedure in granting leave to guardians to enter into the agreement for reference to arbitration.
- Whether the leave required by O.32, R.7 must be obtained before the application for reference is filed (or before the order of reference is made), i.e., timing of the court's permission relative to the reference process.
- Whether the plaintiffs were denied sufficient opportunity to examine the arbitrator and, therefore, whether the matter should be remanded for examination or the award set aside on grounds of alleged misconduct or procedural unfairness.
Arguments of the Parties
Appellants' Arguments
- The award is invalid because the arbitration reference involved minors, and there was no proper compliance with Order 32, Rule 7: specifically, (a) the court in granting permission merely recorded the word “permitted” without stating reasons, and (b) the application for leave under O.32, R.7 should have been filed along with the joint application for reference on 3-7-1947, and not a few days later.
- The case should be remanded because the plaintiffs were not given a sufficient opportunity to examine the arbitrator who made the award; the appellants alleged vague misconduct by the arbitrator and contended they were not afforded adequate time to develop that case.
The opinion does not set out detailed counter-arguments presented by the respondents in the text of the judgment.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Ishan Chandra v. Nilratan, 2 Pat. 538 (A.I.R. 1923 Pat. 375) | That in order to satisfy O.32, R.7 it is enough that the court's attention was directly called to the minor's interest and leave was obtained in some manner not open to doubt; no particular formula or reasons are necessary when the court records leave. | The court relied upon this decision to hold that no particular wording or reasons are necessary and that a recorded permission (even without detailed reasons) can suffice so long as the court applied its mind and leave was recorded. |
| Manohar Lal v. Jadunath Singh, 33 I.A. 128 (28 All. 585 P.C.) | Principle supporting the above view that formalistic wording or recorded reasons are not required for leave under the relevant rule. | The court noted that Kulwant Sahay J. relied upon this Privy Council decision in laying down the principle summarized in Ishan Chandra, and the present court agreed with that view. |
| Ramgulam Sahu v. Durga Pershad, 6 Pat. L.J. 190 (A.I.R. 1921 Pat. 14) | An earlier decision dealing with compliance with leave requirements where the court found evidence suggesting the court did not exercise judgment about the minor's benefit, rendering the compromise not binding on minors. | The court treated this decision as distinguished by Ishan Chandra: Ramgulam Sahu was held to be inapplicable where the record shows the court did apply its mind to the minor's interest and recorded permission. |
| Mariam Bibi v. Amina Bibi, I.L.R. (1937) All. 317 (A.I.R. 1937 All. 65 F.B.) | Considered the timing question: whether leave for agreement to refer must be obtained before the application for order of reference is made; in that case there was no recorded permission and the reference was held invalid. | The court explained that Mariam Bibi is concerned with the absence of any permission; in the present case permission was recorded before the final order of reference, so Mariam Bibi did not invalidate the reference here. |
| Dharmdhar v. Phulkumari, 21 Pat. 629 (A.I.R. 1945 Pat. 391) | Explained Mariam Bibi: leave granted before recording the compromise or before final recording of terms substantially complies with O.32, R.7 because the court can apply its mind before the settlement becomes operative. | The court applied this reasoning to arbitration: if leave is granted before the final order of reference, substantial compliance with O.32, R.7 is satisfied and the reference is valid and binding on minors. |
Court's Reasoning and Analysis
The Court addressed the two objections in sequence.
1. On the question of compliance with O.32, R.7 when minors are parties:
- The Court observed the chronology: the joint petition for reference to arbitration was filed on 3-7-1947; the petition by the next friend/guardian ad litem for leave under O.32, R.7 was filed on 7-7-1947; after that petition the Court recorded an order granting permission and thereafter passed the order referring the case to arbitration.
- The Court rejected the contention that the court was required to state reasons when recording permission. Citing Ishan Chandra (and indirectly Manohar Lal), the Court held that no particular formula is necessary and that what matters is that the court's attention was called to the minor's interest and leave was obtained in a manner not open to doubt.
- The Court distinguished Ramgulam Sahu as a case where the record showed the court had not exercised its judgment on whether the settlement was for the minor's benefit; by contrast, in the present case the court was conscious of the minor's interest and did apply its mind.
- The Court also addressed timing arguments referencing Mariam Bibi and the explanatory decision in Dharmdhar v. Phulkumari. It held that permission granted before the final order referring the matter to arbitration amounted to sufficient compliance with O.32, R.7 and that the rule's purpose is satisfied if the court applies its mind before the compromise/reference becomes operative between the parties.
- On that basis the Court concluded there was no illegality in the reference and that it was binding on the minors concerned.
2. On the contention that the appellants were not given sufficient opportunity to examine the arbitrator:
- The Court noted that the appellants' petition of objection made vague allegations of misconduct, but the award itself was a lengthy document in which the arbitrator considered the issues.
- The Court found, from the order sheet, that sufficient time had been given to the appellants to examine the arbitrator. The appellants did not call themselves or other witnesses to substantiate the alleged misconduct.
- The Subordinate Judge's refusal to grant further time on 23-2-1948 and his adoption of the award were held to be justified because no evidence was led to show the arbitrator failed to consider materials or was guilty of misconduct.
- Accordingly, there was no basis to remand the matter for examination of the arbitrator or to set aside the award on the grounds advanced.
Holding and Implications
Final Holding: The appeal is DISMISSED and dismissed with costs. The court upheld the validity of the reference to arbitration and the award.
Immediate Consequence: The arbitration award was adopted by the Subordinate Judge and is treated as valid and binding upon the parties, including the minors, because the Court found there had been sufficient compliance with Order 32, Rule 7 (the leave of the Court was recorded and the Court applied its mind before the order of reference was made).
Broader Implications: The opinion applies existing precedent to confirm that (a) O.32, R.7 does not require any specific formula or recorded reasons so long as the court's leave is plainly recorded and the court applied its mind to the minor's interest, and (b) leave granted before the final reference or recording of the compromise constitutes substantial compliance with the rule. The opinion does not purport to lay down new law; it follows and applies prior authorities and distinguishes earlier contrary decisions on their facts.
Judge Ramaswami concurred.
Sarjoo Prasad, J.:— This appeal is on behalf of the plaintiffs and is directed against an order refusing to set aside an award. Mr. Rati Kant Choudhury who appears on behalf of the appellants has put forward two contentions before us. First is that the award is invalid because it was passed upon a reference to which minors were parties but there was no proper compliance with the provisions of O. 32, R. 7 granting permission to the guardians of the minors to enter into the agreement for reference to arbitration. The second point urged on behalf of the appellants is that the case should be remanded because no opportunity was given to the plaintiffs to examine the arbitrator who gave the award. I shall deal with the two objections seriatim.
2. It appears that plaintiffs 3 and 4 who are the sons of plaintiff 1 were minors and they were represented by their father and natural guardian plaintiff 1 in the suit. On the side of the defendants, defendant 2, the son of defendant 1, was a minor and he was represented in the suit by a pleader guardian ad litem. On 3-7-1947 an application was filed praying that the suit be referred to the arbitration of one Babu Janki Raman Prasad Misser. On that date it appears that there was no application filed on behalf of the minor plaintiffs and the defendant for permission to enter into the compromise. On 7-7-1947 the next friend of the minor plaintiffs and the guardian ad litem of the minor defendant filed a petition praying for permission to enter into the agreement to refer the matter to arbitration. On that petition having been filed the Court recorded an order granting permission and thereafter the Court passed an order for referring the case to the arbitration of the arbitrator concerned. Learned counsel for the appellants submits that there has not been sufficient compliance with O. 32, R. 7 first because in granting permission the Court merely observed “permitted” without recording any reasons for granting such permission. In the second place he submits that this application for leave to enter into the agreement for reference to arbitration should have been made along with the application itself which was filed on 3-7-1947 and that not having been done the order is illegal. In my opinion both these contentions are without any substance. Under O. 32, R. 7 no particular formula is necessary and the Court is not bound to give reasons for granting permission to the guardian ad litem to enter into the agreement for reference or for compromise. If any authority is needed for this purpose we may refer to a decision of this Court in Ishan Chandra v. Nilratan, 2 Pat. 538; (A.I.R (10) 1923 Pat. 375) which has been followed in a number of other cases by this Court. Kulwant Sahay J. who delivered the judgment in that case observed as follows:
“In order to attract the provisions of O. 32, R. 7 of the CPC it is enough to show that the attention of the Court was directly called to the fact that a minor was a party to the compromise and that the leave of the Court was obtained on petition or in some way not open to doubt. No particular formula is necessary to be used by the Court in order to grant the leave and when it is shown that an application was made by the ??? on the Court asking for leave to enter into the compromise and the Court makes a note of that application and passes a decree in terms of the compromise, it must be held that the leave of the Court was expressly recorded within the meaning of O. 32, R. 1 of the Code.”
The learned Judge relied upon a decision of the Judicial Committee of the Privy Council in Manohar Lal v. Jadunath Singh, 33 I.A 128 : (28 All. 585 P.C) for the principle which he laid down in that decision. I with great respect ??? with the view expressed by his Lordship in that case.
3. In this case there was an application filed on behalf of the guardian ad litem as well as the guardian of the minors to enter into the agreement to refer the dispute to arbitration. That petition is referred to by the Court in the order of which reference has been made by me above and after that the Court recorded the order permitting the guardians to enter into the agreement on behalf of the minors. Learned counsel for the appellants has relied upon an earlier decision of this Court in Ramgulam Sahu v. Durga Pershad, 6 Pat. L.J 190 : (A.I.R (18) 1921 Pat. 14). But that case has been fully discussed in Ishanchandra v. Nilratan, 2 Pat. 538 (A.I.R (10) 1923 Pat. 375), and distinguished there. In distinguishing the decision in Ramgulam Sahu v. Durga Pershad, 6 P.L.J 190 : (A.I.R (8) 1921 Pat 14) Kulwant Sahay J. pointed out that on the evidence in that case the Judges came to an express finding that there was evidence on the record to suggest an inference that the Court never intended to exercise its judgment on the question whether the settlement was for the benefit of the minor and under those circumstances it was held that the compromise decree was not binding on the minors. In this case it is ??? that the Court was conscious of the interest of the minors and the Court did apply its mind to the application which was presented to him Seeking permission to enter into the agreement for reference to arbitration on behalf of the minors. If under these circumstances the Court granted the permission required, the Court evidently applied its mind to the matter and I have no reason to think that in recording the permission the Court did not act as provided by the law under O. 32, R. 7 I may here refer to the language of the rule itself which requires that a next friend or guardian for the suit shall not without the leave of the Court, expressly recorded in the proceedings, enter into any agreement or compromise on behalf of a minor with reference to the suit. The principle of the rule applies with equal force to an application for reference to arbitration. The rule does not expressly require that the Court must record reasons for granting the permission. All that it does require is that the Court should apply its mind to the matter before granting such leave and in this case we find that the Court did apply its mind to the petition on which the permission was granted to the guardian ad litem of the minor plaintiffs and to the guardian ad litem of the minor defendants.
4. As to the second part of his contention under O. 32, R. 7, learned counsel for the appellants has relied upon certain observations made in a Full Bench case of the Allahabad High Court in Marian Bibi v. Ammo, Bibi, I.L.R (1937) All. 317 : (A.I.R (24) 1937 All. 65 F.B). In that case the second point which was referred to the Full Bench for consideration was formulated as follows: If the answer to the above question, (viz., “whether Para. 1 of sch. 2, to Code of Civil Procedure, is subject to the provisions of O. 38, R. 7”) is in the affirmative, should the leave of the Court for the agreement to refer the suit to arbitration be obtained before an application for an order of reference is made, or leave can be granted by the Court even after the award has been delivered? Mr. Choudhury contends that the leave of the Court should have been obtained before the application for an order of reference was made. It is true that the question has been a bit widely formulated if I may say so with respect to the learned Judges who decided the case. But it simply means that the permission should be granted under O. 32, R. 7 before an order of reference is made by the Court. In that case as it appears from the facts, there was no order granting such a permission to the guardian ad litem of the minor to enter into the agreement for reference to arbitration at all. That being so their Lordships held that the reference was invalid and could not bind the minors. In the present case it is clear from the order sheet that the order granting permission to the guardians on behalf of the minors was made before the Court finally passed order directing the case to be referred to the arbitrator. The observations made by the learned Judges in Mariam Bibi v. Amina Bibi, I.L.R (1937) All. 317 : (A.I.R (24) 1937 All. 65 F.B) have been explained by a Division Bench of this Court in Dharmdhar v. Phulkumari, 21 Pat. 629 : (A.I.R (32) 1945 Pat. 391). That was a case which related to the validity or invalidity of a compromise arrived at between the parties to the suit. The compromise took place on 30-1-1913 and the application for getting it recorded was filed in April 1944. An argument was advanced before their Lordships that after the adult members had entered into the compromise and filed terms thereof in Court it was not open to the guardian ad litem to make an application for leave to compromise on behalf of the minors on those terms. Their Lordships repelled that contention and held as follows:
“The prohibition contained in R. 7 of O. 32 against a next friend or a guardian ad litem entering into an agreement or compromise without the leave of the Court being expressly recorded, in my opinion, does not go to the length of saying that a compromise entered into by the adult members may not be sanctioned by the Court even if the application for recording the compromise is accompanied by an application on behalf of the guardian ad litem for the leave of the Court….. It is only when negotiation has reached the stage of settlement that the guardian-ad litem would be in a position to know the exact terms on which the contending parties would agree to settle their differences. Only when that stage has been reached, it is possible for the guardian ad litem to obtain the necessary sanction of the Court. Hence, in my opinion, if the leave of the Court is granted to the guardian ad litem before the compromise is actually recorded, the terms of R. 7 of O. 32 of the Code would be substantially complied with, because until the compromise has been recorded, it does not become operative between the parties so far as the pending litigation is concerned.’
These observations would apply with equal force to the present case. It is true that in this case the application on behalf of the next friend of the minor plaintiffs and the guardian ad litem of the minor defendant was filed a few days later after the joint petition for reference to arbitration had been filed on 8-7-1947. Nevertheless the direction to refer was not made until the permission had been granted to the guardians concerned. That being so, in my opinion there has been sufficient compliance with the law and I do not think that there was any illegality in the reference to arbitration which is binding upon the minors concerned.
5. I will next come to the other point raised by the learned counsel for the appellants, viz., that he was not given sufficient opportunity to examine the arbitrator. In his petition of objection to the arbitration he made certain vague allegations about misconduct on the part of the arbitrator. The award is a sufficiently long document in which the arbitrator appears to have fully considered the pros and cons of the matter. But in any event we find from the order sheet that sufficient time was given to the appellants to examine the arbitrator concerned. If the appellants were actually serious in establishing their case of misconduct they could bare examined themselves or any other witness on the point which they have failed to do. The learned Subordinate Judge therefore was fully justified in eventually rejecting their application, for time on 23-2-1948 and in the passing order which be did in adopting the award given by the arbitrator. The learned Subordinate Judge has rightly pointed out that there was no evidence adduced on behalf of the objector to show that the arbitrator failed to examine any or all the materials placed before him nor was there evidence to show that he was guilty of any misconduct.
6. In the circumstances I do not see any merit in this appeal which must fail and is dismissed with costs.
7. Ramaswami, J.:— I agree.
V.S.B
8. Appeal dismissed.
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