Judgement
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.
2. 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.
3. 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.
4. 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.
5. 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 further 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 a 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.
6. 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 parties to such an award.
7. 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 (1) of Sch. II of the Civil Procedure Code. The significance and the import of the words in the suit has been the subject of judicial discussion. Generally by suit is meant a civil proceeding initiated by the presentation of plaint. The word suit has been held to include an appeal as it is only a continuation of suit. The question has arisen with 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 made applicable, in all proceedings in any Court of Civil jurisdiction."
That Section as would be clear from its wording speaks only of miscellaneous proceedings, proceedings other than a regular suit. It is now settled that the proceedings referred to in S. 141 though not partaking of the nature of a suit are proceedings, original in character such as proceedings initiated for the grant of probate, succession certificate and similar proceedings. Vide Thakur Pershad v. Fakhirulla, 22 Ind App 44 (A).
The question as to whether by force of S. 141, C. P. C., proceedings in execution could not be regarded as coming within the category of a suit came up for consideration before the Privy Council in the same case. The question arose under S. 647 of the Code of 1882 which reads as follows :
"The procedure herein prescribed shall be followed so far as it can be made applicable in all proceedings in any court of civil jurisdiction other than suits and appeals."
There was a conflict of view as to whether proceedings in execution could be regarded as proceedings other than suits or appeals coming within s. 647 of act xiv of 1882. The Privy Council observed in the above case that the proceedings spoken of in S. 647 did not include execution proceedings. When the matter was before their Lordships an explanation to the above section was added which specifically said that the section did not apply to application for the execution of decrees.
The addition of the explanation according to their Lordships did not make any difference, and their Lordships expressed the view that the amendment merely expressed the true meaning of the Civil Procedure Code. It is clear that S. 141, C. P. C., would not include proceedings in execution.
8. Looked at from another point of view also proceedings in a suit cannot include proceedings in execution, for a suit embraces all proceedings which terminate in a decree and the proceedings relating to the enforcement of the decree are proceedings which are quite different and distinct from proceedings in the suit itself.
9. Under Schedule II of the Code of Civil Procedure which related to arbitrations, which substantially corresponded to S. 21 of the Arbitration Act, Act X of 1940, it was always held that matters of dispute arising in proceedings in execution could not be referred to arbitration. Under the Civil Procedure Code, provisions relating to suits are not applicable to all proceedings. The chapter relating to execution proceedings is self-contained.
We, are, therefore, of the opinion that proceedings in execution cannot be the subject of reference to arbitration. Broadly speaking any relief which a Civil Court is competent to grant and which is enforceable by a suit may be granted by the arbitrators. 10. The next point to be considered is whether an award obtained in execution proceedings could be regarded as operating as an adjustment of 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 be regarded as lending support to this view is S. 47 of the Arbitration Act which reads as follows :
"Subject to the provisions of S. 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."
The proviso makes it clear that the award may be regarded as a compromise or adjustment of a suit if all the parties interested consent to the award. The consent that is required is consent at the time when the award comes up for consideration; the fact that originally the reference to arbitration was made by consent of the parties interested would not satisfy the requirements of the proviso.
The consent referred to in the proviso must be something other than the consent to refer the matter to arbitration in order that the award may be taken into consideration as a compromise or an adjustment of a suit. It must be acquiesced in or agreed to to be treated as an adjustment. The consent of all interested parties is a sine qua non to acting upon the award and recording it as a compromise or adjustment of the matter in dispute.
11. There was, however, a conflict of decisions between Bombay, Allahabad and Madras High Courts on the one hand and Calcutta and Lahore on the other. The Bombay and the other Courts holding the same view held that a valid reference in a pending suit followed by an award operated as an adjustment of the suit while the Calcutta High Court held a contrary view. These were cases under S. 89 and Schedule II of the Civil Procedure Code. But after the Arbitration Act, the conflict ceases to have any importance in the face of the express words in S. 47 of the Act.
That the trend of decisions has been only to this effect would be clear from the decisions of the Allahabad High Court and Patna High Court in Moradhwaj v. Bhudar Das, 1955 All LJ 96 : ((S) AIR 1955 All 353) (FB) (B) and Raghunandan Rai v. Shuklal Rai, AIR 1952 Pat 258 (C). So far as the Madras High Court is concerned the first case that deals with this matter was Full Bench case of Subbaraju v. Venkatarama Raju, ILR 51 Mad 800 : (AIR 1928 Mad 1025) (D).
This was a case which arose before the Arbitration Act of 1940 was passed. In this case the Full Bench was of the opinion that where the parties referred the matters in dispute to arbitration and an award is made a decree in terms of the award could be passed by the Court under O. 23, R. 3, C. P. C., though the parties do not accept the award. Philips J., who delivered the judgment of the bench observed :
"If, however, the award satisfies the provisions of O. 23, R. 3, C. P. C., there is no provision in the Civil Procedure Code which expressly takes away the rights of the parties to proceed in accordance with the section."
Later, after the Arbitration Act came into force the matter was considered in the case of Arumuga Mudaliar v. Balasubramania Mudaliar, ILR 1946 Mad 39 : (AIR 1945 Mad 294) (E). 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 Palaniandi Chetty v. Kannappa Gowndan, AIR 1951 Mad 281 (F), and the learned Judge felt doubtful about the correctness of the decision in the previous case viz.; ILR 1946 Mad 39 : (AIR 1945 Mad 294) (E), 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 v. Mohammed Siddiq, ILR 1953 Mad 677 : (AIR 1953 Mad 781) (G), Venkatarama Iyer 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 ILR 1946 Mad 39 : (AIR 1945 Mad 294) (E), 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.
12. The result is that these revisions must be allowed with costs throughout.
Revisions allowed.