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Shripad Baji Garware v. Dattatraya Vithal Garware

Bombay High Court

Nov 16, 1938

Judgment

Subsequent
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Analytical Summary of the Opinion

Factual and Procedural Background

The plaintiff filed a suit for partition of joint family property against four defendants. Defendants 2 to 4 were minors; defendant 1 was their father and acted as their guardian ad litem and as manager of the family. The plaintiff and defendant 1 applied (and defendant 1 assented) for a reference of the disputes to arbitration, and the Court allowed the reference and appointed two pleaders as arbitrators. After nearly three years the arbitrators made an award.

The defendants applied under paragraph 15 of Schedule 2 of the Code of Civil Procedure to set aside the award on various grounds, principally alleging (a) misconduct by the arbitrators, (b) that the arbitrators wrongly held the defendants liable to account for Rs. 21,000, and (c) that the award was illegal and invalid on its face. In oral argument an additional ground was pressed: that the reference to arbitration was invalid because, although minors (defendants 2–4) were involved and defendant 1 was their guardian ad litem, no leave of the Court had been obtained for the reference as required by Order 32, Rule 7 of the Code.

The Subordinate Judge heard these objections, rejected them as without substance, dismissed the application to set aside the award, and ordered a decree to be drawn up in terms of the award. The defendants then applied for revision of that order under Section 115 of the Code of Civil Procedure.

Legal Issues Presented

Whether the reference to arbitration (and the award) was invalid because the leave of the Court required by Order 32, Rule 7 (when minors are concerned) was not obtained or expressly recorded.
Whether an application in revision under Section 115 CPC lies against an order made under the arbitration provisions of the Code (i.e., whether revision is a available remedy to challenge such an order).
Whether the arbitrators acted beyond their authority or with misconduct (in particular in finding defendants liable to account for Rs. 21,000) so as to warrant setting aside the award.
Whether the award is invalid because it purported to deal with properties outside the jurisdiction of the Court.

Arguments of the Parties

Applicants' (Defendants') Arguments

The reference to arbitration was invalid as to the minors because the leave of the Court required by Order 32, Rule 7 was not obtained or expressly recorded; accordingly the award is voidable as to the minors.
The arbitrators were guilty of misconduct and without justification held the defendants liable to account for Rs. 21,000 (the plaintiff's alleged half-share of cash kept in the family house), and there was insufficient legal evidence for that finding.
In argument before this Court it was also urged that parts of the award concerned properties outside the Court's jurisdiction.
Counsel for the applicants (Mr. Coyajee) relied on authorities (including ILR (1937) All 317) to support revision or at least to challenge the order in this Court.

Opponent's (Plaintiff's) Arguments

A preliminary objection was raised that no application in revision lies against an order made under the arbitration provisions relied upon (this contention rested upon an interpretation of the Privy Council decision in 29 IA 51).
Counsel for the opponent (Mr. Thakor) relied on authorities to argue that the revision application is not maintainable and that the Subordinate Judge's dismissal of the application to set aside the award should stand.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
29 IA 51 (Privy Council)	Authority relied upon to argue that no revision lies against an order made under the arbitration provisions.	The opinion acknowledges this Privy Council decision was relied on by the opponent to support the preliminary objection, but explains that its interpretation does not preclude revision where Section 115 conditions are met (as pointed out in later decisions).
49 Bom 535	Interprets 29 IA 51 as not precluding interference by revision provided Section 115 conditions are met.	The Court relied on this construction to explain that revision can lie in certain circumstances (i.e., when a court has exercised jurisdiction not vested in it, or has acted illegally or with material irregularity).
ILR (1937) All 317 (Full Bench, Allahabad High Court)	Addresses whether an order of reference overruling objection (for want of sanction where minors concerned) can be challenged by appeal or by revision; discusses effect of a reference invalid for lack of Court sanction.	The Full Bench's construction placing the same view on 29 IA 51 was noted; the Full Bench held that (generally) the decision overruling the objection cannot be challenged by appeal or revision, but that orders tainted by illegality or material irregularity remain open to revision. The opinion observes that this Full Bench decision is, on balance, against the maintainability of the present application.
40 IA 132 (Privy Council)	Holds that the manager's powers qua manager do not absolve him from obligations imposed by the Code of Civil Procedure when he is next friend or guardian of a minor.	The Court relied on this authority to reject the trial Judge's reasoning that the manager's capacity justified omitting the express leave required by O.32, R.7; the trial Judge was held to be clearly wrong on this point.
15 Bom LR 223	Cited in connection with the effect of Order 32, Rule 7(2): that a minor or his guardian/next friend may repudiate an agreement (including a reference to arbitration) not sanctioned by the Court.	Used with other authorities to support the proposition that if the reference is repudiated the award and decree fall to the ground as far as the minor is concerned.
36 Bom LR 738	Also cited regarding the effect of Order 32, Rule 7(2) and the minor's right to repudiate an unsanctioned reference.	Referred to alongside other authorities to establish that the rule requires express sanction and that the minors can repudiate absent such sanction.
C.R.A. No. 69 of 1931 (earlier proceeding of this Court)	An earlier instance where the same preliminary objection (that no revision lies) was taken and the Court overruled it, subject to Section 115 considerations.	The present opinion notes that in that earlier case the preliminary objection was overruled (though with hesitation) and that it pointed out the construction of 29 IA 51 as interpreted by 49 Bom 535.
C.R. No. 261 of 1936 (this Court)	Referred to on the question of separability of parts of an award (i.e., whether parts dealing with property outside jurisdiction render the whole award invalid).	The Court referred to this judgment to indicate that whether an award is invalid in whole depends on separability; the present Court relied on that reasoning in declining to entertain a new point on revision which was not raised below.

Court's Reasoning and Analysis

The Court's analysis proceeded in distinct steps addressing jurisdictional, procedural and substantive objections:

Preliminary objection on maintainability of revision:
The opponent argued that no revision lies against the relevant order (relying on 29 IA 51). The Court reviewed prior decisions (including 49 Bom 535 and a prior decision of this Court, C.R.A. No. 69 of 1931) and acknowledged that revision is not precluded absolutely: revision may lie where Section 115 conditions are satisfied (i.e., where a Court has exercised jurisdiction not vested in it or acted illegally or with material irregularity). The Court therefore proceeded to hear the application on its merits.
Main substantive objection — failure to comply with Order 32, Rule 7:
The Court accepted that defendants 2–4 were minors and that defendant 1 was their guardian ad litem and manager. There was nothing on record to show that the leave of the Court for reference to arbitration, as required by O.32, R.7, had been obtained or expressly recorded. The trial Judge had attempted to justify the omission on the ground that the manager's powers entitled him to bind the minors; the Court rejected this reasoning, relying on authority (notably 40 IA 132) that the manager's status does not absolve compliance with the Code. The Court held that Order 32, Rule 7 requires express leave of the Court and that, absent such recorded leave, the minor (or his next friend/guardian) may repudiate the agreement to arbitrate and the award and decree would fall to the ground as to the minor.
Whether revision should be exercised in the present case:
Despite finding that the procedural requirement of O.32, R.7 had not been satisfied, the Court considered whether revision under Section 115 was an appropriate remedy. The Court noted that the Full Bench decision in ILR (1937) All 317 was against the maintainability of the present revision but acknowledged the complexity and uncertainty in the authorities. On balance the Court was not satisfied that Section 115 provided a basis for interference in the present circumstances — it did not find that the trial Court had been guilty of illegality or material irregularity falling within S.115. Even if revision were maintainable, the Court would not exercise its extraordinary powers: the minors have an alternative remedy by suit, and the effect of O.32, R.7(2) is that the reference is voidable only as against the minors (the award binds the adult parties). The Court considered that remitting the minors to a suit was an appropriate course rather than upsetting the entire arbitration by extraordinary revision relief.
Challenge to award on merits (Rs. 21,000) and other points:
The Court addressed the contention that the arbitrators acted beyond their authority in holding the defendants liable to account for Rs. 21,000. The Subordinate Judge had found that the arbitrators were within their authority and had not violated principles of equity, justice and good conscience. The present Court observed that the Subordinate Judge had jurisdiction to decide this point and that awards on merits are intended by the Legislature to be final; whether the judge was right or wrong on the merits is not a ground for interference in revision.

A further point — raised before this Court but not before the trial Court — alleged that the award dealt with properties outside the Court's jurisdiction. The Court held that such a contention would not necessarily invalidate the award in whole; its effect would depend on separability of that part of the award (citing C.R. No. 261 of 1936). More importantly, because this point was not raised in the Court below, the present Court declined to entertain it in revision.

Holding and Implications

Holding:

Rule discharged.

The Court discharged the rule (i.e., dismissed the application in revision). Although the Court found that the requirements of Order 32, Rule 7 had not been complied with (so that, in principle, a minor could repudiate an unsanctioned reference and the award would not bind him), the Court was not satisfied that interference by way of revision under Section 115 CPC was appropriate in the present case. The Court concluded it was not shown that the trial Court had acted illegally or with such material irregularity as to justify exercise of the extraordinary powers of revision.

Practical implications (as stated or directly deducible from the opinion):

The order of the Subordinate Judge dismissing the application to set aside the award stands; the decree in terms of the award is to be drawn up unless and until the minors pursue the alternative remedy available to them.
Order 32, Rule 7(2) has the effect that a reference to arbitration which lacked the Court's sanction is voidable as against the minor — the reference and award do not bind the minor but do bind adult parties to the arbitration.
The Court emphasized that awards on the merits by arbitrators are intended by the Legislature to be final; mere error on the merits is not a ground for interference in revision under Section 115.
The Court will not, in revision, entertain points not taken in the Court below (for example, alleged want of territorial jurisdiction of the Court over certain properties) where no such objection was raised at the proper stage below.
The decision does not announce a novel general rule but applies existing authorities to the facts; no new binding precedent beyond the reasoning in this opinion is asserted.

D.S/R.K

Disposition: Rule discharged.

Show all summary ...

1. In a suit for partition of joint family property filed by the plaintiff, the opponent in this application, against four defendants, the present applicants, of whom-defendants 2 to 4 were the minor sons of defendant 1, an application was made by the plaintiff and assented to by defendant 1 for the reference of the matters in dispute in the suit to arbitration. The Court allowed the application and appointed the arbitrators suggested by the parties, two pleaders. In course of time, after nearly three years in fact, the arbitrators gave an award. The defendants then applied under para. 15 of Sch. 2 of the Code to set aside the award on various grounds, the principal of which were that the arbitrators have been guilty of misconduct, that they had without any justification held the defendants liable to account for a sum of Rupees 21,000 and that the award was illegal and invalid on the face of it. This last objection was mainly based on a ground not mentioned in the application itself but develop, ed in the arguments, viz that though defendants 2 to 4 were minors and defendant 1 had been appointed their guardian ad litem, the leave of the Court had not been obtained for the reference to arbitration as required by O. 32, R. 7. The Sub-ordinate Judge heard arguments on these and the other objections, and holding that there was no substance in them, dismissed the application and ordered a decree to be drawn up in terms of the award. The defendants now apply for revision of this order under Section 115 of the CPC.

2. A preliminary objection has been taken by Mr. Thakor who appears for the opponent that no application in revision lies against an order made under these provisions of the Code. The same objection was taken in C.R.A No. 69 of 19311 and I overruled it though with some hesitation. I pointed out in my judgment in that case that the Privy Council decision in 29 IA 51,2 as interpreted by this Court in 49 Bom 535,3 does not preclude interference in revision in such cases provided that the requirements of Sec. 115 are satisfied, i.e when it can be shown that a Court has exercised a jurisdiction not vested in it by law or failed to exercise a jurisdiction so vested or to have acted in the exercise of its jurisdiction illegally or with material irregularity. Mr. Coyajee who appears for the applicants has pointed out that the same construction has been placed on this Privy Council case by a Full Bench of the Allahabad High Court in ILR (1937) All 317.4 I have accordingly heard the application argued.

3. The first, and in my opinion the only really substantial ground on which this Court is asked to interfere, is the failure to comply with the provisions of O. 32, R. 7. Although, as I have said, defendants 2, 3 and 4 were minors and defendant 1 was their guardian ad litem, there is nothing to show that the leave of the Court was obtained for the reference of the disputes to arbitration, and certainly the leave of the Court was not expressly recorded in the proceedings as required by the rule. The learned trial Judge thought that this difficulty could be got over because defendant 1 was the manager of the family and entitled as such to get the family disputes settled by arbitration so as to bind minor members of the family. He referred to several cases but in none of these was there any question of the operation of O. 32, R. 7. When the manager of a Hindu family is the next friend or guardian of a minor in a suit, his powers qua manager do not absolve him from the obligations imposed by the Code of Civil Procedure. It was so held by the Privy Council in 40 IA 132.5 The learned Judge was quite clearly wrong on this point. The effect of Cl. 2 of R. 7 and the authorities [15 Bom LR 223,6 36 Bom LR 7387 and ILR (1937) All 317 may be referred to as well as the Privy Council case] is that the minor or his next friend or guardian may repudiate an agreement including a reference to arbitration which has not been sanctioned by the Court as required by law. If the reference is repudiated, the result is, as pointed out in the Allahabad case, that the award and the decree passed upon it fall to the ground as far as the minor is concerned. That being the law, I think the Judge ought certainly to have allowed the application when it was brought to his notice that the requirements of O. 32, R. 7, had not been satisfied. No doubt he says in his order:

The Court was fully cognizant of the interest of the minors and inasmuch as it sanctioned the reference it must be presumed to have given the leave also.

4. But the Judge who made the order sought to be revised was not the same Judge who sanctioned the reference and it is not dear how he could be in a position to speak about the knowledge of his predecessor. There does not appear to be any thing in the papers on record to show that the Court was asked to apply its mind to the interests of the minors or did in fact apply its mind to that aspect of the case, although no doubt the pleadings of the par ties would have disclosed the fact that there were minors concerned. Anyhow the Rule in question requires that the leave of the Court should be express and not merely implied.

5. It does not follow however that the minor is entitled to get relief by way of revision of the Court's order disallowing among other objections the objection based on this rule. Mr. Thakor has relied on the Privy Council case, 29 IA 51, which, according to him, is an authority for holding that the minor has no such right. That is really the same point as the one taken in the preliminary objection and it is disposed of as far as I am concerned by 49 Bom 535. The point is discussed at length in ILR (1937) All 317 at pages 324 and 325 by Sulaiman C.J and at pp. 330 to 333 by Iqbal Ahmad J.

6. On the other hand, it is quite true that there is no direct authority in the applicants' favour, and on this particular point the Full Bench decision of the Allahabad High Court in ILR (1937) All 317 is against the maintainability of this application. One of the questions referred to the Full Bench was whether the decision of the Court that made the reference to arbitration overruling an objection relating to the invalidity of the order of reference and pas-sing a decree in accordance with an award can be challenged by an appeal or by an application in revision. The grounds on which the order of reference was said to be invalid was precisely the same as in the present case, viz. that a minor was concerned and the sanction of the Court had not been obtained. The answer given to the question was that the decision of the Court that made the reference to arbitration overruling the objection and passing a decree in accordance with the award cannot be challenged by an appeal or by an application in revision, for at most that amounts to an error of law. No doubt the answer then went on to say that the order made by the Court, where it acted illegally or with material irregularity in the exercise of its jurisdiction, can be challenged by way of revision, though not by way of appeal, whether the illegality or irregularity was committed before the reference to arbitration or after the receipt of the award. Beading the two parts of the answer together in the light of the observations in the judgments, it seems that what was held was that in the case of a reference invalid by reason of failure to obtain the Court's sanction, the order of reference itself was open to revision but not the decision of the Court overruling the objection. In view of the state of the authorities, it seems to me to be very difficult to say what the legal position precisely is. But on the whole I am not satisfied that revision lies under the circumstances of this case. That is to say, I am not satisfied that the trial Court has been guilty of any illegality or irregularity which comes within the scope of S. 115. In any case even if revision lies, I am not satisfied that it is a case in which the Court ought to use its extraordinary powers. There is no doubt that the minors have an alternative remedy by suit. The effect of O. 32, Rule 7(2), is that the reference to arbitration is voidable against all parties other than the minor. The reference and the award do not bind the minor but they do bind the adult parties thereto. Mr. Coyajee says if the minors' application be allowed the arbitration as a whole must fail because the award could not be split up. There could be no adjustment of shares as between the minors and the other parties and it would be impossible to say that the award is good in part and bad in part. But that seems to me to be a rather good reason for remitting the minors to their remedy by a suit.

7. The award and the Subordinate Judge's finding affirming it have also been attacked with reference to the arbitrators' finding that the defendants are liable to account for a sum of Rs. 21,000. This represents the plaintiff's half share of cash held to belong to the family and to have been kept in the family house. There are entries about this money in the accounts. Mr. Coyajee says that the cash balance was not carried forward after 1892 and there is no legal evidence to justify the finding that the defendants are accountable for it. The Subordinate Judge held that the arbitrators were acting within the scope of their authority in dealing with the question of the cash balance and that there was nothing to show that they had violated the rules of equity, justice and good conscience. It is obvious that he had jurisdiction to decide this point, and whether he was wrong or right there is no ground for interference in revision. The Legislature has very clearly indicated its intention that the awards of arbitrators, on the merits of the case at any rate, should be final.

8. The only other point urged on behalf of the applicants was one which was not taken in the trial Court at all. It is said that the award deals with some properties not within the jurisdiction of the Court. That however would not necessarily invalidate the award as a whole. It would depend upon whether the part of the award dealing with such property was separable or not. In that connexion I may refer to my judgment in C.R No. 261 of 1936.8 Moreover this is an application to revise the Subordinate Judge's order, not to revise the decree. If the point had been taken before the Subordinate Judge at the proper time, the difficulty could probably have been got over. In any case I cannot agree that this Court should interfere in revision on a point which has never been taken in the Court below. For these reasons I hold that the rule should be discharged with coats.