Kemp, J.:—

The main point in this appeal is whether a suit will lie to set aside a reference and award made through the Court under the provisions of the second schedule of the Code of Civil Procedure.

The facts giving rise to the present appeal are as follows. Certain firms dealing in piece-goods in Bombay combined together for the purpose of importing large quantities of those goods for sale for their mutual benefit in Bombay. There were three such combinations which are the subject-matters of three suits, viz., Suit No. 2203 of 1919 relating to a syndicate of two firms; Suit No. 2204 of 1919 relating to a syndicate of six firms; and Suit No. 2244 of 1919 relating to a syndicate of ten firms. The suits were for dissolution of the partnerships formed by the respective syndicates and the immediate cause of the suits was the slump in the piece-goods market in Bombay. All the firms in the syndicates of two and six were the members of the syndicate of ten. On April 4, 1921, a consolidated consent order was taken (Cor. Kajiji, J.) referring the suits to the arbitration of two senior counsel of this Court, Mr. B.J Desai and Mr. D.F Mulla. Interim awards were made by the arbitrators on April 16, 1924, and April 10, 1925. The time for making the award was extended to November 1, 1926. Then, on December 13, 1926, on a chamber summons for further extension of time (Cor. Rangnekar, J.) Some of the defendants objected that the syndicate of ten was an illegal association as it was not registered under section 4 of the Indian Companies Act. On August 18, 1927, a consent order was taken from Mr. Justice Rangnekar superseding the arbitration under the order dated April 4, 1921, and referring the three suits together with two other suits (Suit No. 984 of 1923 and Suit No. 420 of 1922) filed by the receiver in Suit No. 2244 of 1919 against a debtor to the syndicate in that suit to the joint arbitration of the same arbitrators. In this consent order the parties agreed to be precluded from advancing the plea under section 4 of the Indian Companies Act and further agreed that the issue of illegality of the syndicate of ten should be regarded as res judicata. Thereafter Suit No. 3820 of 1922 was filed by the receiver in Suit No. 2244 of 1919 against Messrs Hargovan Ranchhod, debtors to the syndicate of ten. In this suit Mr. Justice Davar on April 5, 1928, held, in favour of the defendants in that suit, that the syndicate of ten was illegal under section 4 of the Indian Companies Act. The arbitrators continued to hold sittings at which the defendants pleading illegality attended under protest, but on April 13, 1928, the arbitrators passed their final award. A summons was then taken out by those defendants Nos. 3 to 10 to set aside the award. The present plaintiffs-appellants on June 5, 1928, also filed the suit (No. 1175 of 1928) out of which the present appeal arises to declare the consent order dated August 18, 1927, and all proceedings before and after that order and the award under it void. The chamber summons stands over pending the disposal of this appeal. The trial Judge dismissed Suit No. 1175 of 1928, and from that decree the present appeal has been filed.

The main point is whether the suit will lie having regard to paragraphs 15 and 16 of the second schedule of the Code of Civil Procedure. No decree has been passed on the award. Now, it is open to a party objecting to an award to apply under paragraph 15(1)(c) that it is invalid. The invalidity may be of the reference or the award or both. If the reference is invalid the award must ipso facto also be invalid. I attach no importance to the distinction sought to be made by the appellants' counsel between the words “arbitration and award” and “award” in section 14 of the Indian Arbitration Act and paragraph 15 of the second schedule of the Code of Civil Procedure respectively. In my opinion the difference in the phraseology is immaterial. Now, no appeal will lie under the Civil Procedure Code from an order setting aside or refusing to set aside an award; for section 104 of the Code of Civil Procedure does not provide for such an appeal. An appeal will lie under clause 15 of the Letters Patent; for section 104 in prohibiting appeals from orders other than those mentioned in it exempts from its operation cases where an appeal lies “by any law for the time being in force.” Further, under paragraph 16 of the second schedule of the Code of Civil Procedure, no appeal lies from a decree passed on an award except in so far as the decree is in excess of or not in accordance with the award. Since the addition of the words “or being otherwise invalid” in paragraph 15 of the second schedule the only remedy open to a party seeking to impeach an award as invalid is to apply under that paragraph to have it set aside. The addition of those words was to give effect to the principle of finality in cases of arbitrations enunciated in Ghulam Jilani v. Muhammad Hussan. I am not prepared to say that in no case will a suit lie to set aside proceedings purporting to be taken under the second schedule of the Code of Civil Procedure. If the proceedings are fraudulent, fictitious or vexatious, I think a suit would lie (see section 9 of the Code of Civil Procedure); for in such a case the proceedings would only have been instituted to injure the plaintiff and would only be used as a cloak to cover that fact. They would not be proceedings in an arbitration at all. Such a case would arise, e.g, where the defendant forged the plaintiff's name to a reference or where the plaintiff was a minor and the sanction of the Court had not been given to the reference. In E.D Sassoon & Co. v. Ramdutt Ramkissen Das it was observed that a suit would lie although, no doubt, that was a suit to set aside an arbitration purporting to be under the indian arbitration act and in that Act the words “or otherwise invalid” are absent. But that is not the case here. Apart from the question which has been raised as to the obligation on the Court to take notice of an illegality alleged to be patent on the face of the proceedings, the plaintiffs-appellants have consented to an order of reference, and are seeking to impugn the award made on such reference. There has been an agreement to refer although the appellants ask the Court to ignore it. Such a position does not, I think, come within the scope of the cases in which a suit will lie.

Nor do I think that the fact that the syndicate of ten contravened the terms of section 4 of the Indian Companies Act was patent on the face of the proceedings. No issue of what I shall call “illegality” was raised at the trial of Suit No. 2244 of 1919. The objection was first taken, if we exclude a letter in August 1926, on December 13, 1926, on a summons for extension of time for the award. The objection really is that the Court cannot wind up or otherwise recognise an unauthorised association. The respondents argue that on December 13, 1926, the question of illegality was res judicata as that question was not raised when the order of April 4, 1921, was made. They argue that the principle of res judicata in section 11, explanation IV, of the Code of Civil Procedure applies. No doubt that principle applies to interlocutory proceedings in the same suit, but the appellants here contend that the order of April 4, 1921, was vacated by the order of August 18, 1927, under which the award was passed and, moreover, that the latter order was passed in five suits whilst the order of April 4, 1921, was only passed in three suits. But it is to be noticed that by the consent order of August 18, 1927, the parties to that order expressly agreed that the question of illegality should be res judicata and to that extent effect was given to the order of April 4, 1921. I think the matter is res judicata provided the appellants' contention as to the obligation on the Court to refuse to give effect to an “illegality” also fails.

The argument is that it is incumbent on the Court to investigate in the proceedings the plea that the syndicate of ten was not registered under section 4 of the Indian Companies Act. Now, there must, I think, be circumstances which amount to something more than the possibility of the association being illegal before the Court can be said to be bound of its own motion to investigate it. If the illegality is not ex facie apparent, or if it is a mixed question of law and fact, or is a question the determination of which depends on extraneous facts, the Court is not bound to assume that the illegality exists or must necessarily come to light on a trial of the facts. The fact that the illegality is subsequently established in other proceedings cannot overcome the plea of res judicata: Shoe Machinery Company v. Cutlan. The parties cannot litigate the matter over again in view of the later decision. Here the syndicate of ten consisted of ten firms. There was nothing when the suit was filed to show ex facie that it would comprise more than twenty partners. What number less than ten is to be regarded as sufficient to arouse the suspicion of the Court and require it to investigate the facts? In this country it is by no means unusual to find a person carrying on business as a firm, or the manager of a joint Hindu family as the sole partner in a firm although he represents the whole joint family. The question of this association being an unauthorized one was directly suggested and abandoned by the terms of the consent order of reference dated August 18, 1927. Was that enough to require the Court to investigate it? I think not. The matter might have been different had evidence been taken in the suit which brought the “illegality” to light. I do not think the circumstances and the mere allegation that the syndicate was an illegal association, an allegation which was abandoned later without going into the evidence, can be regarded as sufficient notice to the Court of the “illegality.” Even if the facts could be considered suspicious the Court should not consider that they are incapable of explanation. Nor were the plaintiffs in the three suits warned by the issues raised at the trial that the point that the syndicate was not registered as a company was going to be pleaded. (See North-Western Salt Company, Limited v. Electrolytic Alkali Company, Limited.) I think it unnecessary to refer to the numerous cases that were cited before the trial Judge. They have all been discussed in his judgment.

There can be no doubt that the parties could not compromise the question whether the syndicate was an unregistered association if the Court were bound to take notice of the want of registration, but in view of what I have said this was not, I think, a case in which the Court was called upon to inquire into the omission to register.

I am, therefore, of opinion, that

(1) No suit will lie on the facts of this case to set aside the arbitration proceedings.

(2) The question of the non-registration of the syndicate of ten was res judicata by virtue of section 11 of the Code of Civil Procedure, explanation IV, and the consent order of April 4, 1921, referring the dispute to arbitration.

(3) The Court was not here required by law to give effect to or investigate the alleged want of registration.

(4) The objection of non-registration was one which was and could be lawfully compromised by the parties.

I would, therefore, dismiss the appeal with one set of costs to respondents Nos. 1, 2 and 3. Other respondents to bear their own costs.

Murphy, J.:—[After stating the facts his Lordship proceeded:] Mr. Coltman's case is that the syndicate of ten having been formed contrary to the provisions of section 4(2) of the Indian Companies Act, its affairs cannot be investigated and its transactions cannot be wound up, and the resulting rights and liabilities cannot be enforced by the Courts, because of this radical defect; and further, that the orders of reference, and, in particular, the order of August 1927, could not be validly accepted by the Court, because the latter precludes certain of the parties from raising the contention of the invalidity of the syndicate and declares that the point is res judicata, an agreement which is, on the face of it, illegal. He is answered that assuming the syndicate of ten was an illegal or improper association, or at any rate one which transgressed the provisions of section 4(2) of the Indian Companies Act, an issue which has not been tried, his clients cannot now file a suit in which to raise such contentions, because the proceedings he challenges were held under the second schedule of the Civil Procedure Code, which prescribes his client's remedies, and does not permit an alternative, and that his clients are now barred from raising these contentions by the rules of res judicata and estoppel.

The points raised before us were Nos. 1, 2 and 4 cited above, and my findings on them are in the same sense as those of the learned trial Judge, and I have reached them for the following reasons.

Though argued before us in the shape of three separate points, the question we have to decide is essentially simple, for it amounts to no more than, whether the appellants shall, given their line of conduct to the point of the reference of August 18, 1927, be heard or allowed to prove in this suit that the so-called syndicate of ten was one whose transactions cannot be wound up by the Courts, because it was an unlawful partnership, as offending against section 4(2) of the Indian Companies Act of 1913.

Appellants' contention is that this can be done by this suit, framed to this end, because, given the character they impute to the syndicate of ten, all the lengthy and excessively costly proceedings so far taken towards that winding up are void.

They have been answered by the findings, that because of their course of conduct, in effecting a compromise of the question, in allowing it to be decided implicitly in the several other proceedings, and in adopting the alternative of a reference under Schedule II of the Code of Civil Procedure, their suit is barred by the rules of estoppel and res judicata by sections 9 and 89 of the same Code.

The first point to note is that the question of the legality, or otherwise, of the syndicate of ten has never been decided. It depends on the question of fact—What was the number of “persons” which composed it? This is not as simple a question as it appears to be. If the syndicate of ten was composed of more than twenty “persons,” it being admittedly an association for the purpose of gain, it offended against the provisions of section 4(2) of the Indian Companies Act, and was in that sense unlawful. This involves the further question of the meaning of the word “persons” in the section. The Indian Companies Act does not define it. By the definition to be found in the General Clauses Act, section 3(39), a “person” may be made up of more than one individual. It has been held, for instance, that a joint Hindu family may be a single “person” within the meaning of the Indian Companies Act—see the case of Moti Ram v. Muhammad Abdul Jalil. We are told that some of the firms forming the syndicate of ten are Hindu joint family firms, and though it has been decided in a separate suit, which is not now relevant, that the syndicate of ten was an unlawful partnership, the learned Advocate General was prepared to argue that it was not so. The question, therefore, remains undecided and there is only the fact that it has been raised in the form of an allegation by the appellants in the course of the numerous proceedings which ended in the award that the plaintiffs are now seeking to avoid.

The next point is, whether such a question as the illegality of the syndicate of ten can be compromised? The compromise which preceded the reference to arbitration was in the course of a suit. Though it was here really an agreement to refer, I believe that the rule applicable would be rule 3 of Order XXIII; for though that deals with adjustments and final compromises in suits, there is no essential difference, and an agreement to refer is a case of the class of “compromise.”

The essential of a compromise is “a lawful agreement to that end.” By the definition such a compromise falls in the general class of agreements, or contracts, and I understand that a compromise is “unlawful” in the same cases in which an agreement would be unlawful, as when it is against public policy and so on, Sundarambal Ammal v. Yogavanagurukkal; though there may be some distinct cases, such as compromises of probate proceedings held to be inadmissible in the case of Monmohini Guha v. Banga Chandra Das. It has also been held that a compromise cannot supersede an order of reference by a Court, Dooly Chand Srimali v. Mohan Lal Srimali, though this case is perhaps more relevant in connection with the last point in the appeal. Of course, there is no doubt that the parties here could compromise their differences generally, what is alleged is that the question of the legality of the syndicate of ten could not properly be compromised by the appellants' undertaking not further to raise it, and also the connected question of res judicata. But the argument in support of his finding used by the learned trial Judge seems to me to have been driven home by the numerous authorities he has quoted.

The plaintiffs in the several cases were seeking, among other matters, a settlement of the accounts of the syndicate of ten, and the connected syndicates. If, in the course of their pleadings or of their evidence, it had appeared that the syndicate of ten offended against section 4(2) of the Indian Companies Act, it would, I believe, have been the duty of the Court to refuse further to enforce the claims of that unfortunate mercantile combination against the appellants, in those consolidated suits. But this is not what happened. Prima facie, the syndicate of ten was a lawful association. Appellants raised the contention that it was an unlawful one and had the cases proceeded, they would have borne the burden of the issue raised towards a finding on their allegations. They did not persevere, but in effect agreed to cease from their contention, in view of the other side's consent to an arbitration, which excluded that contention and one as to res judicata. I cannot do better than quote the passage from the trial Court's judgment embodying the quotation from Kay L.J's judgment in Hudderfield Banking Company, Limited v. Henry Lister & Son, Limited (p. 285):—

“Now, what constitutes a compromise? A compromise takes place when there is a question of doubt and the parties agree not to try it out, but to settle it between themselves by a give-and-take arrangement. I quite agree that if this was a case of that kind it would be extremely difficult to interfere with the order.”

In fact, in that case, it was found there was no compromise: but the definition serves nevertheless. Again, in Miles v. New Zealand Alford Estate Co., Bowen L.J observed (p. 672):—

“It seems to me that, if a person bona fide forbears a right to litigate a question of law or fact which it is not vexatious or frivolous to litigate, he does give up something of value.”

In fact, a compromise of doubtful right is generally the foundation, and a sufficient foundation, of such agreements: Stapilton v. Stapilton. It appears to follow from these authorities that if the right compromised was doubtful, there would be nothing unlawful in the undertaking to give up contending for it, as the order of reference of August 18, 1927, provided.

I have already given reasons for thinking that the contention that the syndicate of ten was unlawful is an uncertain question of law and fact. It appears to me, therefore, that it was one which could be the subject of a legal agreement of the kind which was made in the order of reference.

The point of the duty of the Court in such cases has been fully dealt with by the learned trial Judge in the 26th and 77th paragraphs of his judgment where his conclusion rests on the authority of the decisions in North-Western Salt Company, Limited v. Electrolytic Alkali Company, Limited and Lipton v. Powell.

The remaining two points in the appeal are really no more than other aspects of the same question, and both must ultimately be decided on the principle stated by Holmes L.J in Irish Land Commission v. Ryan, quoted in the learned trial Judge's judgment (p. 584):—

“It is a principle in every system of jurisprudence that there should be finality in litigation. A judgment not appealed from binds the parties and privies for all time by what appears upon its face; and if it can be shown that, in the course of the action that resulted in the judgment, a certain definite and material issue not set forth in the judgment itself was raised by the parties and determined judicially or by consent, it would be contrary to public policy to allow the same parties to re-agitate the same matter in subsequent legal proceedings. Estoppel by matter of record rests on this principle, and although it may be said in one sense to exclude the truth, it is essentially just and righteous.”

Though the facts here are complicated by the numerous suits with different parties which were ultimately consolidated in the single reference of August 18, 1927; and with the question of the illegality of the syndicate of ten, the Lord Justice's statement of the law seems to me entirely to cover them. The argument here has been that section 11 of the Civil Procedure Code cannot apply because the reference of August 18, 1927, was made to include the contentions in five suits, while the original reference made by Kajiji, J. included only three suits and was superseded by the second one; while, though Suit No. 2244 includes all the parties in Suits Nos. 2203 and 2204, Suit No. 984 brings in a new party in Kanji Dharamsey, and Suit No. 420 a second fresh one, in Vallabhdas Dinshaw.

But, though it is possible that, on a strict interpretation, section 11 may possibly not apply, that section is not exhaustive of all instances of res judicata. What happened here has already been stated, and the affairs involved in all five suits were ultimately by consent consolidated in the final reference to arbitration, which has since ripened into an award and a decree in its terms. The vital issue of illegality was clearly raised in the proceedings which preceded the reference, and was by the latter given up by the appellants, and has therefore by implication been decided against them in the final decree.

The argument that the plea of estoppel by res judicata cannot prevail because of the illegality of the syndicate of ten, is, I think, disposed of by the ruling of this Court in Chhaganlal v. Bai Harkha. In that case Sir Basil Scott, C.J held that, if the point raised in the second suit could have been a good defence in the first suit (here the agreement to waive it) it operated as res judicata, even though the result of giving effect to the rule would be to sanction what was illegal; on the ground that there was no such limitation in section 13 (now section 11) (p. 482):—

“Similarly if it (the defence available) is abandoned or not put forward by a defendant it must, having regard to the provisions of section 13, be deemed to have been decided against him.

On these authorities, which appear to me to be apt and the numerous others quoted by the learned trial Judge, I agree that appellants are now barred from further litigating this question.

The last point is very similar, the principle involved being, that where a party has elected to follow a particular course open to him and later finds it inexpedient to continue in it, he cannot be, in general, permitted to reopen the whole question involved by adopting his second alternative course. In other words, having had recourse to the procedure laid down for arbitrations, appellants cannot afterwards be allowed to challenge the findings in those proceedings by means of a separate suit, but must be confined to the remedies provided by law for persons who have submitted their differences to arbitration.

But apart from this general consideration, which rests on the principle underlying the rule of res judicata, that in the interest of public policy there must be an end to the litigation of questions between parties, there is, I think, a clear statutory prohibition to the appellants' present suit.

By section 9 of the Civil Procedure Code the civil Courts have jurisdiction to try all suits of a civil nature excepting suits of which their cognizance is either expressly or impliedly barred.

By section 89 of the code, save as otherwise provided by the indian arbitration act of 1899 or by any other law for the time in force, all references to arbitration whether by an order in a suit or otherwise and all proceedings thereunder shall be governed by the provisions of the second schedule.

It seems to follow plainly from these two provisions that where proceedings have assumed the character of an arbitration, they shall be governed by the provisions framed for the purpose of regulating references and other proceedings thereunder.

Prima facie, therefore, appellants' obvious course on the ground relied on was to seek such relief as was open to them under the second schedule, and if a specific remedy was there available to them they should not be allowed to have recourse to another because of the fundamental principle stated in the case named Pasmore v. Oswaldtwistle Urban Council, quoted by the learned trial Judge. The case of Gokul Mandar v. Pudmanund Singh is here also in point.

The scope of the provisions of the second schedule as they now are, their history, and the circumstances of the amendment of the old ones of Chapter XXXVII of the old Code have been set out in the learned trial Judge's judgment and he has left nothing which can profitably be added to his observations.

The leading authority on the point is the case of Ghulam Jilani v. Muhammad Hussan. It was there held that where a decree has been made on an award after a reference and objections to the validity of the award have been judicially disposed of, no appeal lies from the decree, the principle being that awards shall, as far as possible, be final. In other words, an award can only be set aside in accordance with the rules of the second schedule. This principle is not seriously disputed but it is insisted that there is here no question of an appeal from a decree made on an award, but so far only a reference which is illegal and which can be set aside by a suit alone. The argument is that the second schedule of the Code does not govern the matter until there is a valid reference, and since there are no provisions in the Code to enable a party to challenge the validity of the reference itself, the alternative is a suit in which this may be done.

Essentially, what the appellants are seeking is an interference by decree with an interlocutory order made in another proceeding, and which, subject to certain limitations, is final.

I do not think it is correct to say the appellants had no remedy under the second schedule. A reference once made may itself be superseded under paragraphs 5, 8 and 15. The occasion for the application of paragraph 5 did not here arise. That for paragraph 8 occurred several times, but in each case the Court extended the time. The remaining remedies were against the award based on the reference under paragraphs 14(c) and 15(c) and it is clear the appellants had in those proceedings a means of challenging the award for their present objection would be within paragraph 15(c) “or being otherwise invalid” Actually the objection was made under paragraph 8 of the chamber summons of December 13, 1926, and the matter was adjourned into Court and argued, but that ended in a consent order. It does not seem to have been made under paragraph 15.

There is also the authority of the case of Pestonjee Nussurwanjee v. Manockjee & Co. for the view that a party to a reference can revoke a submission for good cause and the Court would always have inherent power to annul a submission for a valid reason. See Bom. Fire Insurance Company v. Ahmedbhoy.

The case of Chintamallayya v. Thadi Gangireddi is a direct authority on the point that the Court has jurisdiction to entertain objections to the validity of an award and that a separate suit to establish such a contention will not lie.

I have already referred to sections 9 and 89 of the code. It does not appear to me useful to argue that there cannot be arbitration proceedings until a valid reference has been made. The objection sounds a truism, but in fact it makes an assumption, which is that whether the reference is valid, or not, can be decided in another Court, or at any rate can be contested in such a Court.

The same might be said in other proceedings, such as suits, that for a given reason the suit is not maintainable, and the claim be made that the question could be agitated in a second suit while the first was proceeding.

The subject-matter of the present suit relates to a reference to arbitration and proceedings thereunder and must, I think, be governed by the provisions of the second schedule. I believe it is thereby impliedly barred both by section 89 and the general principle set out in Pashmore v. Oswaldtwistle Urban Council, I have already referred to.

I think the trial Court's decree should be confirmed and that this appeal should be dismissed with costs. One set of costs to respondents Nos. 1, 2 and 3. Other respondents to bear their own costs.

Attorneys for appellants: Messrs Edgelow, Gulabchand, Wadia, & Co.

Attorneys for respondents: Messrs Kanga & Co.; Amin & Desai; Merwanji Kola & Co.; Bhaishankar, Kanga & Girdharlal; Mulla & Mulla; Soonderdas, Dwarkadas & Co.; Edgelow, Gulabchand, Wadia & Co.; Dabholkar & Jyestaram.

Appeal dismissed.

B.K.D