Malik, C.J:— This is a plaintiff's application in revision, and the only point raised by learned counsel is that the lower appellate court was not right in its view that the trial court had no jurisdiction to refer the matter to arbitration and was, therefore, not justified in setting aside the decree passed on the basis of the award. The plaintiff had filed an application for redemption of a mortgage under section 12 of the United Provinces Agriculturists' Relief Act (XXYIT of 1934). This application was filed in the court of the learned Munsif of Deoria. During the hearing of the case the parties agreed that one Babu Gorakh Prasad should be appointed an arbitrator in the case. The court appointed B. Gorakh Prasad an arbitrator and in due course the arbitrator gave an award. An objection to the validity of the award was filed on behalf of some of the defendants. On the date fixed for hearing of the objection the objectors were not present and the objection was dismissed and a decree was passed in terms of the award.
Against that decree an appeal was filed in the court of the Additional Civil Judge of Gorakhpur and it was urged that the Munsif had no jurisdiction to refer the matter to arbitration as the provisions of the Indian Arbitration Act did not apply to proceedings under section 12 of the U.P Agriculturists' Relief Act. The objection is based on the ground that section 21 of the Arbitration Act (X of 1940) lays down that—“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.” It is urged that a proceeding under section 12 of the Agriculturists' Relief Act is not a suit. The word “suit” has not been defined either in the General Clauses Act or in the Arbitration Act. Though there is no definition of the term “suit” in the Civil Procedure Code also, section 26 of the Code, provides that “Every suit shall be instituted by the presentation of a plaint or in such other manner as may be prescribed.”
On behalf of the defendants stress is laid on the words “by the presentation of a plaint” while the rest of the section “in such other manner as may be prescribed” is attempted to be slurred over. It may be that proceedings under section 12 of the Agriculturists' Relief Act are not started by the presentation of a plaint but by the presentation of an application, but the words “in such other manner as may be prescribed” in section 26 of the Code is, to my mind, wide enough to include an application under section 12 of the Agriculturists' Relief Act.
Section 2(c) of the Arbitration Act defines a “Court” and provides that “‘Court’ means a Civil Court having, jurisdiction to decide the questions forming the subject-matter of the reference if the same had been the subject-matter of a suit, but does not, except for the purpose of arbitration proceedings under section 21, include Small Cause Court.” That the Tribunal before which an application under section 12 of the U.P Agriculturists' Relief Act is filed is a court is clear from the provisions of section 2, sub-section (5) of the Agriculturists' Relief Act which says that a “Court” means a civil court. In view of that definition the word “court” in section 12 of the Act before which an application under that section is to be filed must be deemed to be a civil court. I have, therefore, no hesitation in holding that the proceedings under section 12 of the Agriculturists' Relief Act are proceedings in a suit before a civil court to which the Arbitration Act is applicable.
It is not necessary to set out the various provisions of the Agriculturists' Relief Act which make it clear that the proceedings under section 12 resemble in every respect a suit. Under section 23 of the Act an appeal is provided and the law is now well settled that on such appeals ad valorem court-fees are payable. These appeals are registered as civil appeals and not as appeals from orders. Under section 26 the period of limitation for an application as well as for appeals and for execution of orders passed under section 12 are the same as for suits in civil courts. Section 27 provides that the procedure is to be the same as prescribed in the Civil Procedure Code for suits.
The question then arises why should the Legislature have used the word “application” in section 12 of the Agriculturists' Relief Act and the order passed therein as an “order”. Ordinary suits for redemption are provided for under the Civil Procedure Code. The Legislature was making a special provision for agriculturists for redemption of mortgages and was taking away the right of second appeal given under the Civil Procedure Code. It may be that to keep the distinction and to save the payment of court-fees which would have been payable on the plaint under the Court Fees Act that section 12 was drafted in the manner indicated above. In any case, the decision of the question whether proceedings under section 12 of the Agriculturists' Relief Act are “suits” or not would not depend merely on the fact that the proceedings under section 12 are initiated by an “application.”
section 27 of the Agriculturists' Relief Act provides that—“The provisions in the Code of Civil Procedure, 1908, in regard to suits shall be followed, so far as they can be made applicable, to all proceedings under this chapter, and all orders passed under this chapter shall be executed in the manner prescribed for execution of Civil Court decrees.” On the date that the Agriculturists' Relief Act was passed in the year 1934, Schedule II of the Civil Procedure Code and section 89 and clauses (a) to (f) of sub-section (1) of section 104 were all in force and presumably they were all applicable to proceedings under section 12 of the Agriculturists' Relief Act. At any rate, it was never doubted that under the Civil Procedure Code such proceedings could be referred to arbitration. These provisions were repealed by section 49(1) of the Arbitration Act. By reason of the provisions of section 8 of the General Clauses Act (X of 1897) where any Act, “made after the commencement of the General Clauses Act, repeals and re-enacts, with or without modification, any provision of a former enactment, then references in any other enactment or in any instrument to the provision so repealed shall, unless a different intention appears, be construed as references to the provisions so re-enacted.” If, therefore, section 89, section 104 and Schedule II of the Civil Procedure Code applied to proceedings under the Agriculturists' Relief Act before 1940 by virtue of the provisions of section 27 of the Agriculturists' Relief Act I do not see why the corresponding provisions of the Arbitration Act should not now be held applicable in view of the provisions of section 8 of the General Clauses Act.
About the applicability of the provisions of section 89 of the Civil Procedure Code nothing has been said by learned counsel for the opposite party. Section 89 provides: “Save in so far as is otherwise provided by the Indian Arbitration Act, 1899, or by any other law for the time being 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 contained in the Second Schedule.” It would appear from what I have said above that section 89 refers not only to an order of reference in a suit but also to proceedings other than a suit, and to all those references the provisions of the Second Schedule are made applicable.
The language of paragraph 1 of Schedule II is very similar to the language of section 21. Paragraph 1 of Second Schedule was as follows: “Where in any suit all the parties interested agree that any matter in difference between them shall be referred to arbitration they may, at any time before judgment is pronounced, apply to the court for an order of reference.” I have looked into the older Acts and I find that even in the Civil Procedure Code of 1859 (VIII of 1859) section 312 makes a provision for reference to arbitration in “suits”. Learned counsel has urged that section 89 and Schedule II of the Civil Procedure Code were the only provisions that gave jurisdiction to the civil courts to refer a case to arbitration and to pass a decree in terms of an award. I find it difficult to accept this argument. It is true that the Legislature has provided Tribunals for decision of civil matters which are in dispute between the parties, but there is no prohibition against parties entering into a compromise except in cases where a person labours under a disability and provisions are made for safeguarding his interest. Where a party has filed a suit before a civil court it does not need any legislative authority to enable him to come to a settlement with the opposite party out of court and to inform the court that he has settled the dispute, and if the dispute is thus settled there is Order XXIII of the Civil Procedure Code under which the parties, or any of them, can ask the court to pass a decree in accordance with the agreement between the parties. Arbitration is nothing more than this that, while in a private compromise the parties settled their disputes themselves, in an arbitration they agree that the dispute shall be settled for them by a third person. The authority that an arbitrator derives flows from the parties and is based on their agreement, and even if no part of the Second Schedule or the Arbitration Act were applicable to him, I do not see why the parties, or any of them, should not have a right to insist under Order XXIII that a settlement should be recorded in terms of an award where an award has been given.
When the word “suit” has not been defined in the General Clauses Act, I see no reason why a restricted meaning should be given to that word so as to take away the rights of the parties to have their disputes settled by a Tribunal of their own choice. The first Arbitration Act is of the year 1899 which was of a very restricted character and did not apply to all proceedings. Even before that Arbitration Act, arbitrations were common. The first Civil Procedure Code is of the year 1859. No doubt there may have been regulations even before that, but it cannot be urged that the rights of the parties to agree to refer matters to a third person, when they could not themselves decide their disputes, had to depend on any Regulation or Act.
Learned counsel has placed before us certain decisions which lay down that proceedings under section 144 of the Civil Procedure Code cannot be referred to arbitrators as they are not suits [see Ram Gopal v. Shanti Lal]. In the case of Shukrullah v. Rahmat Bibi a Bench of this Court held that an appellate court has no right to refer a case to arbitration as an appeal is not a suit. The nature of the proceedings before us is entirely different. If it were necessary, I would have referred this matter to a larger Bench. The decision in Shukrullall's case has been appealed against to the Federal Court and we shall no doubt have an authoritative pronouncement from that Tribunal. In the case of Ram Gopal the reference itself was bad as one of the parties was a lunatic. The case was also, if I may say so, not fully argued.
In proceedings under section 144 of the Civil Procedure Code a decree is passed. A decree is defined as conclusively determining the rights of the parties in a suit. An order under section 144 has been included in the definition of a decree and the decree is appealable as such. There does not seem to be any logical ground for refusing the parties an opportunity to have their disputes decided by arbitration. As I have already said even if it were held that the provisions of the Code were not applicable, I do not see why the award should not be taken as an adjustment under Order XXIII of the Code. I am, therefore, of the opinion that this revision must be allowed, the order passed by the lower appellate court set aside and the order passed by the trial court upheld with costs in all Courts.
Bind Basni Prasad, J.:— I agree and desire to add a few words. Apart from other considerations mentioned by the learned Chief Justice it seems to me that section 27 of the U.P Agriculturists' Relief Act, 1934, is conclusive on the point raised in this revision. It provides:
“The provisions in the Code of Civil Procedure, 1908 in regard to suits shall be followed, so far as they can be made applicable, to all proceedings under this chapter, and all orders passed under this chapter shall be executed in the manner prescribed for execution of Civil Court decrees.”
It is important to note that all the provisions of the Code of Civil Procedure in regard to suits Have been made applicable to proceedings under Chapter III of the Agriculturists' Relief Act except in so far as the provisions of Act are in consistent with those of the Code. Is there anything in the Agriculturists' Relief Act which renders the provisions in the Code of Civil Procedure in respect of arbitration inapplicable to proceedings under section 12 of the Act? I find none. This will be evident from an examination of chapter III of the Act. The sections in the chapter which make some special provisions as regards the procedure are sections 10, 13 to 16 and 23. None of these sections makes the provisions as regards arbitration inapplicable to proceeding's under section 12. When the Agriculturists' Relief Act was passed in 1934 the provisions relating to arbitration were contained in the Code of Civil Procedure. In 1940 the Arbitration Act was passed and then the provisions in the Code of Civil Procedure in respect of arbitration were repealed and they were re-enacted in the Arbitration Act some with and some without modifications. By virtue of section 8 of the General Clauses Act, 1897, the provisions re-enacted with or without modifications in the Arbitration Act are now applicable to the proceedings under section 12 of the Agriculturists' Relief Act.
Mr. Kanhaiya Lal Misra, counsel for the opposite party, contends that paragraph 1 of Schedue II conferring right upon a party to refer a dispute to arbitration is a substantive law and not a law of procedure. He further contends that when the Code of Civil Procedure was applied by section 27, of the U.P Agriculturists' Relief Act to proceedings under section 12, it was only the law of procedure as contained in the Code which was intended to be applied and not any substantive law contained in it. In the first place, the provision relating to reference of disputes in pending suits to arbitration is not a substantive law prescribing the procedure for one of the manners in which a dispute between the parties may be settled. Assuming, however, that it is a substantive law, there is nothing in section 27 of the Agriculturists' Relief Act to limit the application of the Code only to procedural law. It applies the entire Code to proceedings under section 12 except only in so far as the provisions of the Code may be inconsistent with the provisions of the Agriculturists' Relief Act. As already shown above, there is nothing in the Act inconsistent with the provisions of the Code so far as the provisions in respect of arbitration are concerned.
I am clearly of opinion that the reference of the dispute in this case to arbitration was in accordance with law and that the view of the lower appellate court to the contrary is wrong.
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