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Mahammad Mia Pandit v. Osman Ali

Calcutta High Court

Aug 6, 1934

Judgment

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Factual and Procedural Background

This appeal arises from a suit for possession brought by seven plaintiffs. Plaintiffs 1 and 2 were adult males; plaintiffs 3, 4 and 7 were females; plaintiffs 5 and 6 were minors. The minors were represented in the Courts below and in this appeal by plaintiff 1 acting as their next friend.

At the plaintiffs' instance a local investigation was conducted by a pleader Commissioner who submitted a report favorable to the plaintiffs. The defendants objected to that report. On the date of the hearing of the suit (15th August 1930), defendant 2 filed an application stating that the parties had agreed that the lands be measured by one Shama Charan and that if he found that the lands in suit were in the possession of the defendants the plaintiffs would get a decree; otherwise the suit would be dismissed but the plaintiffs would be entitled to receive Rs. 50 from the defendants.

The plaintiffs denied this alleged agreement. The learned Munsif, after taking evidence, accepted defendant 2's version, recorded the alleged compromise under Order 23, Rule 3 of the Code of Civil Procedure (CPC) and dismissed the suit on the findings said to be made by Shama Charan. The Courts below did not appear to have taken leave for representation of the minors under Rule 7, Order 32 of the CPC.

On appeal the principal point presented by the plaintiffs (as the appellate Court described it) was "whether the suit was adjusted between the parties out of Court and whether the compromise should be recorded." The appellate Court confined its consideration largely to the factum of the agreement and upheld the Munsif's recording of the compromise under O. 23, R. 3, and dismissed the appeal. The plaintiffs moved this second appeal challenging that outcome.

Legal Issues Presented

Whether a second appeal lies against a decree that is based on a compromise recorded under Order 23, Rule 3 CPC (and relatedly whether the appeal is barred by sections 104(2) or 96(3) of the Code).
Whether the agreement between the parties (to accept the measurement/decision of Shama Charan) amounted to a lawful out-of-court adjustment/compromise that could be recorded under O. 23, R. 3 CPC or whether it amounted to a reference to arbitration (an award) made without the intervention of the Court, in which event the courts below had no jurisdiction to record it as a compromise.
Whether the Courts below properly protected the interests of the minors where no leave under R. 7, O. 32 CPC had been obtained before recording the compromise.

Arguments of the Parties

Appellant's Arguments

The plaintiffs denied that there was any agreed adjustment as alleged by defendant 2; they contested the factum of the alleged compromise.
The appellants highlighted that some plaintiffs were minors and that no leave was taken under Rule 7, Order 32 of the CPC to represent them; this raised a question about the validity of any recorded compromise affecting minors.
On being indicated that a preliminary objection might bar the appeal, the appellant sought that the Court exercise revisional jurisdiction if it held that no second appeal lay.

Respondent's Arguments

Mr. Dass for the respondents argued that the appeal was incompetent because it was, in substance, against an order recording a compromise under O. 23, R. 3 CPC and therefore a second appeal was barred under Section 104(2) of the Code.
He further argued that even if the appeal were regarded as from the decree, the appellate Court's findings made the decree a consent decree and the appeal was barred by Section 96(3) of the Code.
On the substantive point about Shama Charan's determination, Mr. Dass contended that this decision did not amount to an arbitration award but was an adjustment of the suit that could properly be recorded under O. 23, R. 3; in support he relied on decisions reported as 1924 All 5705 and 1932 All 1666.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
1 M.I.A. 2031 (James, L.J.)	Principle that where parties agree to finality by referring to a person, an appeal may be incompatible with that undertaking (appeal in violation of good faith).	The Court relied on this observation to support the proposition that permitting a second appeal would undermine an undertaking to accept a third person's determination and would amount to allowing two appeals where the Code provides one.
29 Cal 3062 (Ram & Pratt, JJ.)	Observation that parties are equitably estopped from resiling from and impugning a decree given in accordance with a reference to a third person.	The judgment was cited to support the principle that parties who agree to refer matters to a third person should not be permitted subsequently to impugn the decision, and this supported the view against allowing a second appeal on the same matter.
1928 Cal 1083 (Roy, J.)	An observation was noted that might appear to militate against the view taken here.	The Court examined the case and concluded that the specific point now under consideration did not actually arise in that decision; thus it was not relied upon to overturn the Court's conclusion.
1922 Lah 3094 (Lahore High Court)	Authority holding in somewhat similar circumstances that an appeal was incompetent.	The Court expressed agreement with this decision and used it to reinforce its view that the present appeal was not competent.
1924 All 5705 and 1932 All 1666 (Allahabad High Court)	Cases cited by respondent to support the proposition that the parties could be bound by a statement/decision of a person they had nominated and that such a statement could be used to dispose of the suit under O. 23, R. 3.	The Court distinguished these Allahabad decisions from the present case, noting differences in facts and reasoning and observing that they proceeded on views contrary to the decisions of the Court of Calcutta which this Court felt bound to follow.
1934 Cal 6437; 1932 Pat 2058; 1931 Rang 589	Collections of cases demonstrating divergence of opinion among High Courts about whether an award made by a third person without court intervention during pendency of suit can be recorded as a compromise under O. 23, R. 3; interpretation of "any other law for the time being in force" in S. 89 CPC.	The Court noted this divergence and stated that it is bound to follow the decisions of its own Court (Calcutta) which hold that such an award cannot be recorded as a compromise under O. 23, R. 3.
1920 Mad 80010 (Madras High Court)	Held that an award in a pending case made by an arbitrator appointed without Court intervention can be recorded under O. 23, R. 3 (a view contrary to Calcutta decisions).	The Court observed that the Madras decision underpins some contrary views but reaffirmed that this Court follows the Calcutta line of authority which disagrees with that approach.
1917 Cal 32711	Case where the person nominated had to merely observe the existence of certain facts (no judicial or quasi-judicial function) and make a statement.	The Court held that this case did not support the respondent because, unlike that situation, Shama Charan had to perform judicial-type functions; therefore Shama Charan's determination amounted to an award rather than a mere factual statement.
1931 Cal 21112 (Acting Chief Justice)	Authority where reservations in favour of minors were made when recording a compromise/adjustment.	The Court stated that, had it held the case properly fell under O. 23, R. 3, it would have made similar reservations in favour of the minors as were made in that decision; the reference influenced the court's consideration of how minors ought to be protected.

Court's Reasoning and Analysis

The Court proceeded in two principal stages: (1) a jurisdictional/competency analysis addressing whether a second appeal lay, and (2) a determination whether the decision by Shama Charan was a mere adjustment/statement that could be recorded under O. 23, R. 3 CPC or whether it was in substance an award arising from an out-of-court reference (which the Courts below could not record as a compromise).

On the preliminary objection (competency of appeal):
- The Court accepted the contention that a second appeal was incompetent because the Code contemplates a single appeal where the factum or legality of a compromise/adjustment of a suit is questioned. The appellate Court had already found that there was a compromise; allowing the same matter to be re-agitated in a second appeal would permit two appeals where the Code gives one.
- The Court reasoned that a decree that follows from such a finding is, in effect, a consent decree whether or not both parties initially admitted the compromise; therefore Section 96(3) might bar further appeal from such a consent decree.
- The Court relied on equitable principles (as reflected in cited authorities) that where parties agree to refer determination to a third person, they undertake not to appeal the matter; permitting an appeal would violate good faith and withdraw the merits from the Court.
- The Court noted supporting authority (including a Lahore decision) and, although it acknowledged some observations in other cases that might appear contrary, concluded those did not govern the present factual situation.
On the nature of Shama Charan's determination (award vs. adjustment):
- The Court observed a divergence of opinion among various High Courts on whether an award made on a reference without Court intervention during the pendency of a suit could be recorded as a compromise under O. 23, R. 3. The divergence related to differing interpretations of "any other law for the time being in force" in Section 89 CPC.
- As the Court was bound by the precedents of its own jurisdiction (Calcutta), which hold that an award made by a third person without court intervention cannot be recorded as a compromise under O. 23, R. 3, the Court proceeded on that basis.
- The Court distinguished the Allahabad decisions relied on by the respondent as factually and legally different and not controlling here.
- Crucially, the Court analysed the function performed by Shama Charan and concluded that he had to perform work "in the nature of judicial work" — not merely make an observational statement of fact — and therefore his determination amounted to an arbitration award arising out of an out-of-court reference during the pendency of the suit.
- Because that determination was an award made without the intervention of the Court, the Courts below had no jurisdiction to record that decision as an adjustment/compromise under the colour of O. 23, R. 3 CPC.
On minors and procedural protection:
- The Court noted that the Courts below did not appear to have adverted to the fact that some plaintiffs were minors and that no leave under R. 7, O. 32 had been taken. The Court indicated that, had it treated the matter as falling under O. 23, R. 3, it would have made reservations in favour of the minors consistent with the approach in 1931 Cal 21112 (Acting Chief Justice).
- Nevertheless, because the Court concluded the decision was an award and the recording as a compromise was invalid, the issue of making such reservations became unnecessary in the present determination.
Exercise of revisional jurisdiction:
- Although the Court concluded, "though not without hesitation," that no second appeal lay, it considered this case fit for interference under revisional jurisdiction and proceeded to set aside the decrees of the Courts below on that basis.

Holding and Implications

Holding: The Court concluded that no second appeal lay against the decree in the circumstances of this case; however, exercising revision the Court held that the decision by Shama Charan amounted to an arbitration award made without Court intervention and therefore the Courts below had no jurisdiction to record that decision as a compromise under Order 23, Rule 3 CPC. Accordingly, the Court dismissed the appeal but set aside the decrees of the Courts below and directed the learned Munsif to proceed with the suit. The Court made no order as to costs. (Final short statement in the record: "Decree set aside.")

Implications:

The direct effect on the parties is that the decrees passed by the trial Court and the appellate Court (which recorded and acted upon the alleged compromise based on Shama Charan's determination) have been set aside and the suit must proceed in the trial Court (learned Munsif) afresh in accordance with the Court's directions.
The Court reaffirmed the principle (as applied within its own jurisdiction) that an award arising from an out-of-court reference during pendency of a suit cannot be recorded as a compromise under O. 23, R. 3 CPC; therefore courts following this jurisdictional line cannot convert such out-of-court awards into recorded compromises.
The opinion does not purport to create a new precedent beyond the application of the Court's established approach; it follows and applies the Court's prior decisions on the respective issues and distinguishes contrary decisions of other High Courts where relevant.
The Court emphasised the procedural protection of minors: had it recorded the compromise under O. 23, R. 3, it would have made reservations in favour of the minors as indicated by earlier Calcutta authority (1931 Cal 21112).

R.K

Show all summary ...

1. This appeal is on behalf of the plaintiffs and arises out of a suit for possession. There are seven plaintiffs. Of them plaintiffs 1 and 2 are adult males, Nos. 3, 4 and 7 are ladies and Nos. 5 and 6 are minors. The minors were represented in the Courts below by plaintiff 1, who also represents them in this appeal. At the instance of plaintiffs there was a local, investigation by a pleader Commissioner who submitted a report in their favour. The defendants filed an objection to the said report. At the date of the hearing of the suit, which was 15th August 1930, defendant 2 filed an application stating that the parties had agreed to the lands being measured by one Shama Charan and that if it was found by him that the lands in suit were in possession of the defendants, the plaintiffs would get a decree, otherwise the suit, would stand dismissed, but the plaintiffs would be entitled to get Rs. 50 from the defendants. The said defendant further alleged that Shama Charan had measured the lands and had found that no part of the lands in suit was in the possession of the defendants. He accordingly prayed for the said adjustment to be recorded under the provisions of O. 23, R. 3 of the CPC. The plaintiffs denied the said agreement, but the learned Munsif after taking evidence found that the agreement was alleged by defendant 2 and dismissed the suit on the findings of Shama Charan. The attention of the Court does not seem to have been drawn to the fact that some of the plaintiffs were minors. Admittedly no leave of the Court was taken under R. 7, O. 32 of the Code. On appeal from the decree made by the trial Court, the point urged by the plaintiffs, as the appellate Court puts it, was

“whether the suit was adjusted between the parties out of Court and whether the compromise should be recorded.”

2. The Court of appeal below however only applied its mind to the question of the factum of the agreement but did not consider whether the alleged compromise was lawful or could be recorded under the provisions of O. 23, R. 3 of the Code. It did not even advert to the fact that there were minors whose interest it was the duty of the Court to safeguard and protect. The appellate Court agreed with the first Court and remarked that the

“Munsif was justified in recording the compromise under O. 23, R. 3 of the CPC.”

3. The appeal was accordingly dismissed; hence the second appeal by the plaintiffs. A preliminary objection has been taken to the competency of the appeal. Mr. Dass who appears on behalf of the respondents urges firstly that the appeal being really against the order recording the compromise under O. 23, R. 3, a second appeal is barred under the provisions of S. 104(2) of the Code. Secondly he urges that even if the appeal be regarded as an appeal from the decree, after the findings of the Court of appeal below, the decree must be taken to be a decree passed with consent of parties and S. 96(3) of the Code, bars the appeal.

4. In the course of the argument I indicated that possibly the preliminary objection was a sound one. On that the advocate for the appellant asked me to interfere in revision in case I held that no appeal lay. As I considered that the case was a fit one for interference under the revisional jurisdiction I beard the learned advocates at length who presented their cases from all aspects and I must acknowledge the great assistance I have derived from them in the case which has engaged my anxious consideration., After having head the learned advocates I have come to the conclusion, though not without hesitation, that no appeal lies. But I am at the same time quite convinced that I have power to interfere in revision and should so interfere in this case.

5. My reasons for giving effect to the preliminary objection are as follows: (1) The Code provides for one appeal when the factum of legality of a compromise of adjustment of a suit is questioned. The Court of appeal below has arrived at a finding that there was compromise as pleaded by defendant 2. To allow the same matter to be re-agitated in an appeal from the appellate decree would be to allow two appeals where the Code gives one. (2) A decree passed is still a decree passed by consent, whether the compromise is admitted both the parties or disputed by one of them and the Court finds that there was one. (3) Where the parties say that the determination of their disputes by person is to be final as between then that is to be regarded as an undertaking not to appeal, and an appeal preferred would, as James, L.J, observed in 1 M.I.A 2031, be in violation of goo faith and ought not to be entertains where the real merits of the case have been withdrawn from the Court. Th same principle has been formulate though in different language by Ram pini and Pratt, JJ., in 29 Cal 3062 where they observe that parties a equitably estopped from resiling for and impugning the decree which was given by the Court in accordance with the finding on the issue which they agreed to refer to the decision of a thin person. In 1928 Cal 1083 there is a observation which apparently seems militate against the view I am takin but an examination of the case leads in to think that the point which I have been called upon to decide did not reallarise in that case. The observation is of Roy, J. and occurs at p. 356. It is a follows:

“Certain preliminary objections were take by the learned vakil for the respondents. The are not serious one was that no appeal lay from a decree which is based on a compromise. The contention of the plaintiff is that the whole com promise has been struck out. The dispute over the nature of the compromise and the plain tiff has the right to show what the compromise was.”

6. I must first of all remark that the said case came up on first appeal to this Court, but I am not placing much importance on the said fact for distinguishing the said case. From the report in appears that the plaintiff claimed is share in two villages appertaining to Touzi No. 1760/28. The contesting defendants denied the title of the vendor of the plaintiff and the vendor challenged his conveyance to the plaintiff. Issues were framed and the plaintiff was being examined on commission. At that stage a petition of compromise was presented to the Commissioner. By the compromise the plaintiff gave up his claim on the basis of his purchase; the said two villages were to be partitioned between the plaintiff and his cosharers (not parties to the suit) on the one hand and the defendants on the other according to the shares recorded in the Record of Bights by an arbitrator Sarat Chandra Bhattacharjee and that after the division by him the plaintiff was to withdraw the suit.

7. No order was obtained from the Court for appointing Sarat Chandra as arbitrator. Sarat Chandra later on refused to act and on the application of the plaintiff the Subordinate Judge appointed another person as arbitrator under the provisions of para. 5, Sch. 2, Code of Civil Procedure. This person made the division and submitted an award and inspite of the objection of the defendants that there was no reference to arbitration under para. 2 of the said schedule the Subordinate Judge made a decree in conformity with the award. His successor however deleted the so-called award from the decree and the final decree that was made was one simply allowing the suit to be withdrawn without liberty to the plaintiff to bring a fresh suit. It was pointed out by this Court that the compromise between the parties was not simply that the suit was to be withdrawn but was to be withdrawn on the happening of certain contingencies, i.e, the division of the lands by Sarat Chandra. The final decree therefore was one that was not passed in accordance with the consent of the parties and hence S. 96(3) was out of the way. The question raised before me has however been considered by the Lahore High Court in 1922 Lah 3094. The said Court held in circumstances somewhat similar to the present case that the appeal was incompetent and I agree with the said judgment. But as I have said before my decision on the preliminary point does not dispose of the case. I am still to see if the Courts below had jurisdiction to pass an order under O. 23, R. 3 of the Code.

8. My view is that the agreement which both the Courts below have found to be established amounts to a reference to arbitration without the intervention of the Court of the subject matter of a pending suit and the decision of Shama Charan really amounts to an award on such a reference. Mr. Dass who appears for the respondent has contended before me that the decision of Shama Charan does not amount to an award, but is to be considered as an adjustment of the suit which the Courts below have rightly recorded under O. 23, R. 3 and in support of his contention he has referred me to the cases of 1924 All 5705 and 1932 All 1666. Before I examine these cases I may observe that so far as our Court is concerned it is now settled law that an award made on a reference without the intervention of the Court during the pendency of a suit cannot be recorded as a compromise or adjustment of the suit under O. 23, R. 3. The Bombay, Madras, Patna and Rangoon High Courts have however, taken a different view. The divergence of opinion is due to the different interpretations put upon the words “any other law for the time being in force” occurring in S. 89 of the Code, (See the cases collected in 1934 Cal 6437 as also 1932 Pat 2058 and 1931 Rang 589. I am bound to follow the course of decisions of our Court and if the decision of Shama Charan is an award the Courts below had no jurisdiction to record the decision of Shama Charan as an adjustment of the suit under O. 23, R. 3.

9. This leads to the question whether the said decision is an award. The cases of the Allahabad High Court cited by Mr. Dass are distinguishable. In those cases the parties to the suit agreed to be bound by the statement of a person named by them. The nominee made a certain statement and the question raised was whether the suit could be disposed of in accordance with the statement so made. Sulemain and Kanhaiyalal, JJ., base their decision firstly on Section 20 of the Evidence Act, and secondly on the judgment of the Madras High Court in 1920 Mad 80010. The Madras case proceeds on the view that an award in a pending case made by an arbitrator appointed without the intervention of the Court can be recorded under O. 23, R. 3, a view which as I have said is against the decisions of our Court, and Section 20 of the Evidence Act, cannot have any possible application to the case before me. Nor does the case of 1917 Cal 32711 support the contention of the respondent. There no judicial or quasi judicial work had to be done by the person nominated who was only to see with his own eyes a certain state of things, e.g existence of furnace, bellows, etc., in the defendant's house and make a statement in Court. I hold that Shama Charan had to do some work which was in the nature of judicial work and that his determination is an award and that the Courts below had no jurisdiction to pass a decree which is in accordance with the decision of Shama Charan under the colour of exercising the powers under O. 23, R. 3. In the view I have taken it is not necessary to consider the other contentions raised by the appellants. If I had held that the case came under O. 23, R. 3, I would not have set aside the decree of the Courts below so far as the minors are concerned seeing that they are appearing even in this Court by plaintiff 1 as their next friend but would have made the same reservations in their favour as were made by the Acting Chief Justice in 1931 Cal 21112. The result is that the appeal is dismissed, but the decrees of the Courts below are set aside and the learned Munsiff is directed to proceed with the suit. I make no order as to costs.

R.K

10. Decree set aside.